Refer to the data in the previous exercise. Polyplast has been using the internal rate of return

Question:

Refer to the data in the previous exercise. Polyplast has been using the internal rate of return approach to evaluate its long-term investments in the past, and its policy has been to invest in only those projects with internal rates return in excess of 14%.

Data From previous Exercise

Polyplast is considering purchasing an injection-molding machine for $500,000. This machine will, before considering taxes and depreciation, reduce costs by $108,000 per year. Polyplast's tax rate is 30%, and the machine will not have any salvage value at the end of its 10 year useful life. (Assume straight-line depreciation for tax purposes and a discount rate of 12%; further assume that the purchase price is paid now and that all other cash flows occur at year end).

Required:

What is the internal rate of return from investing in the machine? As per company policy, will Polyplast buy the machine?

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... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...