What initial cost of machine D will make the IRR for the two machines equal?
What initial cost of machine D will make the IRR for the two machines equal?
Cost of Machine C ($625,000) Cost of Machine D ($900,000)
Salvage value 17% of purchase value Salvage value 19% of purchase value
First year cost ($85,000) First year cost ($102,000)
Inflation (all costs) 3.00% p y Inflation (all costs) 3.50% p y
First year revenue $190,000 First year revenue $215,000
Increase in revenue 4% p y Increase in revenue 6% p y
Life of machine 5 years Life of machine 5 years
Life of project 20 years Life of project 20 years
Group of answer choices
$479,095
$770,040
$730,419
$1,961,354