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Andreyy89
4 years ago
8

Bau Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $283,215, would have a useful life of 7 ye

ars, and would have no salvage value. The tractor-trailer would be used in the company's hauling business, resulting in additional net cash inflows of $85,500 per year. The internal rate of return on the investment in the tractor-trailer is closest to (Ignore income taxes.):
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.

Garrison 16e Rechecks 2017-11-11

Multiple Choice

23%

16%

19%

14%
Business
1 answer:
Anarel [89]4 years ago
8 0

Answer:

IRR is 23%

Explanation:

We must find the IRR which, when applied to the formula (attached), is equal to zero:.

As we can see, if we apply a rate (r) of 23%, the result of the formula will be zero. Consequently, this is the value of the IRR.

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