Crockin corporation is considering a machine that will save $9,000 a year in cash operating costs each year for the next six years. at the end of six years it would have no salvage value. if this machine costs $33,165 now, the machine's internal rate of return is closest to (ignore income taxes.):

rate = 16%

Explanation:

We need to understand that IRR is the one which makes the NPV equal to zero

In this case we have an annuity of 9,000 for 6 year

C  9,000.00

time  6.00

rate  IRR

At the Pv will equal the invesment so:

we can look for the annuity factor in hthe table to look for the closed one

33165 / 9000 = 3.685

we can look into the table for values of n = 6 which is the closed.

And then start doing trial and error until find it.

For this particular case, hit the IRR just by looking at the table.

for n = 9 and rate = 16% factor = 3.685

This value is the factor of our annuity, so this is the rate.

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20

answer; property tax payment made in july and december;