Refer to the supermarket in S12-12. What is the approximate internal rate of return (IRR) of the
Question:
The local supermarket is considering investing in self-checkout kiosks for its customers. The self-checkout kiosks will cost $45,500 and have no residual value. Management expects the equipment to result in net cash savings over three years as customers grow accustomed to using the new technology: $14,000 the first year; $21,000 the second year; $27,000 the third year. Assuming a 14% discount rate, what is the NPV of the kiosk investment? Is this a favorable investment? Why or why not?
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
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The IRR is the interest rate at which the NPV 0 Because the NPV at 14 is positive the ...View the full answer
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