An investment costing $90,000 is being contemplated by Mergenthaler Inc. The investment will have a life of

Question:

An investment costing $90,000 is being contemplated by Mergenthaler Inc. The investment will have a life of 8 years with no salvage value and will produce annual cash flows of $16,870.

Instructions

Compute the approximate internal rate of return for this investment.

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... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...