A machine that costs $5,600 is expected to operate for 7 years. The estimated salvage value at the end of 7 years is $0. The machine is expected to save the company $1,463 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 40 percent. What is the exact internal rate of return on this investment? Use the calculator and Table IV to answer the question. Round your answer to two decimal places.

TABLE IV Present Value of an Annuity Interest Factor (PVIFA) ($1 per period at 7% per period for n periods); PVIFA = (1 +i) PVAN. = PMT (PVIFA;,") Period, n 1% 2% 3% 4% 5% 6% 79% 8% 9% 109% 1 1% 1296 139 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.88 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.66 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.36 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.97 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.51 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.231 4.111 3.99 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.42 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.79 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.13 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.42 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.68 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.91 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.12 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.30 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6.811 6.4 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 7.379 6.974 6.60 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.72 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.84 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.93 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.963 7.469 7.02 24 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.28 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.33 25.808 22.397 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7.49 40 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.63 50 39.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 9.042 8.304 7.67 60 44.955 34.761 27.676 22.623 18.929 16.161 14.039 12.377 11.048 9.967 9.074 8.324 7.68 Period, n 14% 15% 16% 17% 18% 1996 20% 24% 289% 32% 3696 40 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.806 0.781 0.758 0.735 0.71 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.457 1.392 1.332 1.276 1.22 2.322 2.283 2.246 2.210 2.174 2.140 2.106 1.981 1.868 1.766 1.674 1.58 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.404 2.24 2.096 1.966 1.84 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.745 2.532 2.345 2.181 2.0 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.020 2.759 2.534 2.399 2.16 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.242 2.937 2.678 2.455 2.2 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.421 3.076 2.786 2.540 2.3 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.566 3.184 2.868 2.603 2.3 5.216 5.019 4.833 4.659 4.494 4.339 4.193 3.682 3.269 2.930 2.650 2.41 5.453 5.234 5.029 4.836 4.656 4.486 4.327 3.776 3.335 2.978 2.683 2.43 5.660 5.421 5.197 4.988 4.793 4.611 4.439 3.851 3.387 3.013 2.708 2.45 5.842 5.583 5.342 5.118 4.910 4.715 4.533 3.912 3.427 3.040 2.727 2.46 6.002 5.724 5.468 5.229 5.008 4.802 4.611 3.962 3.459 3.061 2.740 2.47 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.001 3.483 3.076 2.750 2.48 6.265 5.954 5.669 5.405 5.162 4.938 4.730 4.033 3.503 3.088 2.758 2.48 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.059 3.518 3.097 2.763 2.49 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.080 3.529 3.104 2.767 2.4 6.550 6.198 5.877 5.584 5.316 5.070 4.844 4.097 3.539 3.109 2.770 2.49 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.110 3.546 3.113 2.772 2.49 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.143 3.562 3.121 2.776 2.49 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.147 3.564 3.122 2.776 2.49 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.160 3.569 3.124 2.778 2.50 7.105 6.642 6.233 5.871 5.548 5.258 4.997 4.166 3.571 3.125 2.778 2.50 7.133 6.661 6.246 5.880 5.554 5.262 4.999 4.167 3.571 3.125 2.778 2.50