Zachary Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company’s cash outflow for operating expenses by $1,287,000 per year. The cost of the equipment is $9,187,846.67. Zachary expects it to have a 11-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required:
a. Calculate the internal rate of return of the investment opportunity. (Do not round intermediate calculations.)
b. Indicate whether the investment opportunity should be accepted.
1. Internal Rate of Return
2. Should the investment opportunity be accepted?

IRR = 8%

Don't accept the project

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

IRR can be calculated using a financial calculator:

Cash flow in year 0 = -9,187,846.67

Cash flow each year from year 1 to 11 = 1287000

IRR = 8%

Because the IRR is less than the hurdle rate, the project shouldn't be accepted.

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

I hope my answer helps you

engaging in financial planning?

just took my test

the answer choices are:

provides online banking

provides automatic payment services

provides home loans by using saving accounts

accept tax return refunds

hopefully someone can answer the question now lol