# Renfroe Corporation is considering the purchase of a machine that would cost $22,712 and would...

## Question:

Renfroe Corporation is considering the purchase of a machine that would cost $22,712 and would have a useful life of 5 years. The machine would generate $6,300 of net annual cash inflows per year for each of the 5 years of its life. The internal rate of return on the machine would be closest to:

A) 12%.

B) 14%.

C) 8%.

D) 10%.

## Capital Budgeting:

The term capital budgeting is the process of identifying and evaluating potential investment projects. It estimates the costs and benefits of each project and it is used in the long term decision making.

## Answer and Explanation: 1

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View this answerThe internal rate of return is closest to 12%

For calculating IRR, there is trial & error method wherein you use discount rate & find out the...

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Chapter 9 / Lesson 5Learn about the internal rate of return. Understand what the IRR is, identify the problems with the IRR, and examine the importance of the NPV and the IRR.

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