How to calculate the IRR for a machine, that a company buys if:

1. The machine costs $165,000 (useful life: 7 years, salvage value: $15,000) and would have cash sales of $124,000 and cash costs of $80,000 each year during its useful life. It would require $20,000 of working capital which is released at the end of the period.

2. The discount rate of the company is 12% and the tax rate is 20%. Normally the company gets its investment back in 4.5 years.

Answer rating: 100% (QA)

Heres how to calculate the Internal Rate of Return IRR for the machine 1 Determine the cash flows Year 0 Initial investment 165000 negative cash flow ... View the full answer