Select Page

A special machine can save $5,600 per year in cash operating expenses for the next 10 years. The cost is $22,000. No salvage value is expected. Assume the tax rate averages 2/7 of taxable income, straight line depreciation is used, and the cost of capital is = 10%. The CFAT is(a) $5,600(b) $4,629(c) $3,400(d) $2,000Refer to the preceding question. The internal rate of return, using linear interpolation is:(a) 25.45%(b) 21.04%(c) 12.34%(d) 16.47%