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hichkok12 [17]
3 years ago
14

Your firm has the opportunity to buy a perpetual motion machine to use in your business. The machine costs $1,000,000 and will i

ncrease your profits by $75,000 per year. What is the internal rate of return?
Business
1 answer:
sasho [114]3 years ago
8 0

Answer:

7.5%

Explanation:

A forever series formula for the interest rate is  i = A / PV

Annual benefits = $75,000

Present value = $1,000,000

Thus, i = $75,000 / $1,000,000

i = 0.075

i = 7.5%

Therefore, the internal rate of return is 7.5%

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When a bank account is growing with continuous compounding, it means that both the interest accrued and the amount deposited increases continually over a specified period of time.

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