Juan Gonzales, the president of Nogales Corporation, is trying to decide whether he should buy a new

Question:

Juan Gonzales, the president of Nogales Corporation, is trying to decide whether he should buy a new machine that will improve production efficiency. The machine will increase cash inflows $5,000 a year for five years. It will cost $18,000, and there will be no salvage value. What is the internal rate of return?

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...