LaSalle Industries Is Considering the Purchase of a New Strapping

question 40

Multiple Choice

LaSalle Industries is considering the purchase of a new strapping machine,which will cost $150,000,plus an additional $10,500 to ship and install.The new machine will have a 5-year useful life and will be depreciated to zero using the straight-line method.The machine is expected to generate new sales of $45,000 per year and is expected to save $16,000 in labor and electrical expenses over the next 5-years.The machine is expected to have a salvage value of $20,000.LaSalle's income tax rate is 35%.What is the machine's IRR?

• A) 15.75%
• B) 18.86%
• C) 19.15%
• D) 20.03%

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