Baskette Products is considering an equipment investment that will cost $920,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1: $492,000; Year 2: $402,000; and Year 3: $290,000. Baskette wants to know the equipment's IRR.
Requirement
Use trial and error to find the IRR within a 2% range. Use Baskette's hurdle rate of 12% to begin the trial-and-error process. Optional : Use a business calculator spreadsheet to compute the exact IRR.