Sure-Lock Ltd. is purchasing new equipment at a cost of $325,000. The equipment will yield...
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Sure-Lock Ltd. is purchasing new equipment at a cost of $325,000. The equipment will yield incremental cash flows of $100,000 in the first year of its operation. After that, the incremental cash flows will decrease at a rate of 10% per year. The equipment is expected to last for 6 years, and will cost $85,000 for disposal at the end of its life. What is the modified internal rate of return of the equipment using the reinvestment approach? The required rate of return is 15%.
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