Newport Corp Is Considering the Purchase of a New Piece

question 85

Multiple Choice

Newport Corp is considering the purchase of a new piece of equipment.The cost savings from the equipment would result in an annual increase in cash flow of $200,000.The equipment will have an initial cost of $900,000 and have a 6 year life.There is no salvage value for the equipment.If the hurdle rate is 10%,what is the internal rate of return? Ignore income taxes.

• A)between 6% and 8%
• B)between 8% and 10%
• C)between 10% and 12%
• D)less than zero

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