Solve problems $1,2,$ and $3$ by hand and submit them as a single PDF$,$ Sumit problem $4$ as a

single Excel file,

In this week's lecture we calculated the IRR of the following problem:

A new piece of equipment costs $$25,000.$ The equipment has a service life of $5$

years and a salvage value of $$5,000.$ It will produce net revenue of $$8,000$ per year.

If the firm's MARR is $20\%,$ is the equipment justified?

a$)(3$ Points$)$ What is the IRR of this problem if the MARR is changed to $10\%?$

b$)(3$ Points$)$ What is the relationship between the IRR calculated in the class example and

the IRR calculated in part $($a$)?$ What does this imply about the relationship between the

IRR and the MARR?