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
$10,000
Final sales value
3,490
Operating costs
63,190
New equipment
Purchase cost
$160,000
Final sales value
3,490
Operating costs
33,640
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?
I have already tried 0.04 and 0.09 and both I now know are incorrect.
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