TimeTrends integrated time clock and payroll system sells for $271,672. At this price, the annual cost savings
Question:
TimeTrends integrated time clock and payroll system sells for $271,672. At this price, the annual cost savings that the system will generate for Building Keepers, a facilities management company, over its ten-year life will yield an internal rate of return of 13%. Building Keepers requires that all projects achieve a minimum return of 16%.
Required
What price does Building Keepers need to negotiate with TimeTrends so that the system will achieve that return?
Step by Step Answer:
At the list price of 217672 the annual cost savings required to generate a 13 internal rate ...View the full answer
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Internal rate of return is a method of calculating an investment’s rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk.
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