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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:

Six Sigma

A set of techniques and tools for process improvement aimed at reducing defects and improving quality, originally developed by Motorola in 1986.

Statistical Analysis

The process of collecting, reviewing, and interpreting data to discover patterns and trends.

Compensation System

An organizational structure designed to provide monetary and non-monetary benefits to employees for their work.

Demographic-Needs Analysis

An assessment method that examines the characteristics of a specific population to determine their specific needs and how to meet them.