Question: Internal rate of return LO 4 Harrison Hammocks is considering

Internal rate of return (LO 4) Harrison Hammocks is considering the purchase of a new weaving machine to prepare fabric for its hammocks. The machine under consideration costs $88,235 and will save the company $14,000 in direct labor costs. It is expected to last 14 years.

a. Calculate the internal rate of return on the weaving machine.
b. If Harrison uses a 12% hurdle rate, should the company invest in the machine? Why or why not?

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  • CreatedFebruary 21, 2014
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