THE SOLUTION IS BELOW PLEASE CAN YOU SUMMARIZE THE FORMULA & CALCULATION USED TO FIND 13.5% EXCEL IS A LITTLE CONFUSION?

Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $40,000. It has an expected life of 7 years, at which time its salvage value will be $7,500. Operating and maintenance expenses are estimated to be $2,000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $12,000 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow half of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to three equal annual payments, with the first payment due at the end of year 2. The loan interest rate is 8% compounded annually. Aerotron Electronics MARR is 10% compounded annually.

What is this investments external rate of return?

Step 1 of 11 A Firm A of electronics is taking decision about an investment in waterfiltrations system. Cost of Filtration system S40,000 Expected life time 37 years Salvage value 3S7,500 Operating and maintenance expenses 3S2,000 per year $12,000 need to be paid per year for water purification if water system is not bought by the Firm A Firm A Can't afford the whole cost of Water filtration system therefore, it need to borrow half of the money from bank and need to pay 8% annually compounded interest rate on that loan. MARR is 10% compounded yearly. Comment Step 2 of 11 A IRR (Internal rate of return) is the rate of return at which the present worth of cash inflows is equated to the initial outflow for the respective project. MARR (Minimum acceptable rate of return) is the minimum rate which an individual need to be assured about before investing in a new project. Comment