Bau long-haul, inc., is considering the purchase of a tractor-trailer that would cost $281,660, would have a useful life of 7 years, and would have no salvage value. the tractor-trailer would be used in the company's hauling business, resulting in additional net cash inflows of $80,000 per year. the internal rate of return on the investment in the tractor-trailer is closest to (ignore income taxes.):

rate  20.86%

Explanation:

We will setp up the formula for an ordinary annuity

C80000

time7

rate = r

To solve we need to do it on excel, with the IRR function or estimate with try and error:

The first part is the annuity factor with n = 7 we need to look into the PV table of an ordinary annuity which comes close to the quotient of 281,660/8,000 = 3,52075

at 20% = 3.605

at 21%  = 3.508

The rate is between 20% and 21%

We now sart calculating the factor changing the decimals:

our target is: 3,52075

20.5%   3.5557

20.8%   3.5269

20.9%   3. 5174

Now the rate will be between 20.8%

and 20.9%

we start moving amoung the centimals

20.85%    3.5222

20.86 %   3.5212

20.87 %  3.5203

our target is: 3,52075

the IRR will be between 20.86% and 20.87%

we are almost there, we check if we need to round up or down:

our target is: 3,52075

20.865%   3.5207

20.864%   3.5208

20.866%   3.5206

It will be betwene 0.4 and 0.5 so it is better to round down.

We conclude the IRR is 20.86%

a recipe serves 8 people, and calls for 5 lbs of apples and 2 cups of flour. you want to prepare it for 24 people. divide 24 by 8 to get 3, and then multiply your ingredients by 3.

so for 24 people, you'll need 15 lbs of apples, and 6 cups of flour.