A company is considering investing $1.5 million in a new production system today (year 0). The new production system will result in an after-tax cost savings of $200,000 at the end of year 1. These cost savings are then expected to decline at a rate of 4% p.a. forever. What is the internal rate of return of the new production system.

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To calculate the internal rate of return of the new production system we need to determine the rate ... View the full answer