An Investment Costing $90000 Is Being Contemplated by Mergenthaler Inc

question 166

Essay

An investment costing $90000 is being contemplated by Mergenthaler Inc. The investment will have a life of 8 years with no salvage value and will produce annual cash flows of $16870.
Instructions
Compute the approximate internal rate of return for this investment. (Table G-2 is needed)

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Definitions:

Working Capital Policy

It refers to the strategy a company employs to manage its current assets and liabilities to ensure it has enough liquidity to run its operations efficiently.

Accounts Payable

Short-term financial obligations that a company owes to its suppliers or vendors for goods and services received.

Trade Credit Discounts

Reductions in price offered by suppliers to buyers as an incentive for early payment within a specified period.

Short-term Financing

Refers to borrowing options available to businesses for a period typically less than one year, to fulfill immediate financial needs.