Newport Corp

question 78

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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Definitions:

Mean

The average of a set of numerical values, calculated by summing them together and dividing by the number of values.

Median

The middle value in a data set, which separates the higher half from the lower half of the dataset.

National Football League

A professional American football league consisting of 32 teams, divided equally between the National Football Conference (NFC) and the American Football Conference (AFC).

Mean Number

The average of a set of numbers, calculated by dividing the sum of all values by the count of values.