Refer to the information in Exercise 26-2. The company’s required rate of return is 12%.

Data From Exercise 26-2:

Quary Co. is considering an investment in machinery with the following information. Compute the investment’s

a. Compute the investment’s net present value.

b. Using the answer from part a, is the investment’s internal rate of return higher or lower than 12%?

Transcribed Image Text:

Initial investment $200,000 Materials, labor, and overhead (except depreciation)..... $45,000 Useful life.... Salvage value..... Expected sales per year..... 9 years Depreciation-Machinery.... 20,000 $20,000 Selling, general, and administrative expenses.. 5,000 10,000 units Selling price per unit $10