Bill decided that he would ask for that new copy machine he had been researching.It had a purchase price of $250,000, he thought the maintenance costs would total $5,000 a year, and that the copier could reasonably be expected to last seven years.He estimated the salvage value at the end of seven years to be $25,000.

Better still, it was quicker, programmable and should eliminate 80% of the department's annual overtime labor costs of $70,000.

Use the Internal Rate of Return to determine if replacing the equipment is a good investment.