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ElenaW [278]
4 years ago
6

Bau Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $302,820, 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 $84,000 per year. The internal rate of return on the investment in the tractor-trailer is closest to (Ignore income taxes.):
Business
1 answer:
Kruka [31]4 years ago
4 0

Answer:

20%

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

IRR can be calculated using a financial calculator:

Cash flow for year zero =-302,820

Cash flow each year from year one to seven = 84,000

IRR = 20%

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

I hope my answer helps you

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3 years ago
Illinois Company is attempting to develop the cost function for repair costs. The following past data are available: Machine Hou
Harlamova29_29 [7]

Answer:

$480

Explanation:

Data provided in the question:

Machine              Hours Repair Costs

2,400                       $6,385

1,200                        $3,480

2,000                       $5,285

3,400                       $8,980

Now,

                       Machine              Hours Repair Costs

Highest             3,400                       $8,980

Lowest              1,200                        $3,480

Difference        2,200                       $5,500

Unit variable cost =  $5,500 ÷ 2,200

= $2.5

Total cost at high level = $8,980

Machine hours highest level = 3,400

Also,

Total cost at high level = Fixed cost + Variable cost at highest level

or

$8,980 = Fixed cost + [ $2.5 × 3,400 ]

or

Fixed cost = $8,980 -  [ $2.5 × 3,400 ]

= $8,980 - $8,500

= $480

7 0
3 years ago
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