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Use the Following Information to Answer the Question(s)below

question 52

Multiple Choice

Use the following information to answer the question(s) below.
Two years ago,Krusty Krab Restaurant purchased a grill for $50,000.The owner,Eugene Krabs,has learned that a new grill is available that will cook Krabby Patties twice as fast as the existing grill.This new grill can be purchased for $80,000 and would be depreciated straight line over 8 years,after which it would have no salvage value.Eugene Krab expects that the new grill will produce EBITDA of $50,000 per year for the next eight years while the existing grill produces EBITDA of only $35,000 per year.The current grill is being depreciated straight line over its useful life of 10 years after which it will have no salvage value.All other operating expenses are identical for both grills.The existing grill can be sold to another restaurant now for $30,000.Krusty Krab's tax rate is 21%.
-If Krusty Krab's opportunity cost of capital is 12%,then the IRR for upgrading to the new grill is closest to:

Definitions:

Private Arbitration

A dispute resolution process where parties choose an independent third party to make a decision regarding their dispute, outside of court proceedings.

Business Disagreement

A conflict or dispute arising between parties in a business context, often over contracts, negotiations, or operations.

Bank Loan

A sum of money borrowed from a bank that must be repaid with interest over a predetermined period.

Foul Ball

In baseball, a ball hit outside the field of play boundaries, not counting as a strike unless there are less than two strikes.