Problem 5. Using the table in problem 4, calculate the internal rate of return on a $946,250 capital investment with annual net cash flows of $250,000 for each of the six years of its useful life. Problem 4. XYZ Company is considering buying equipment for $600,000. The equipment has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the investment are as follows: Year 1 2 3 4 After tax Net Income $ 90,000 80,000 40,000 30,000 $240,000 NetCash Flow $210,000 200,000 160,000 150,000 $720,000 The company requires a 15% rate of return from its investments. Year 1 2 3 4 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 15% 0.870 1.626 2.283 2.855 3.353 3.785 4.160 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 5 6 7