X Company must decide whether to continue using its current equipment or replace it with...
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Accounting
X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment:
Current equipment
Current sales value
$14,000
Final sales value
3,700
Operating costs
63,220
New equipment
Purchase cost
$164,000
Final sales value
3,700
Operating costs
33,670
The current and new equipment will last for 6 years. If X Company replaces the current equipment, what is the approximate internal rate of return?
A: 0.03
B: 0.04
C: 0.05
D: 0.06
E: 0.07
F: 0.08
IDK if you need this table but just in case:
TTable 1: Present Value of $1.00 Table 2: Present Value of an Annuity of $1.00
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