An engineering firm wants to buy a new equipment that will later be rented to other companies. After looking at several quotes, the cheapest option shows an initial cost of $30,000 and benefits of $5,000 on year 1 and $3,000 on year 2. This pattern of cash flows stays consistent until the end of the 7th year when the machine has a value of $0 and is discarded at no additional cost. Compute the rate of return of this investment.

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To compute the rate of return also known as the internal rate of return or IRR of t... View the full answer