ABC Company Is Considering the Purchase of a New Piece

question 165

Essay

ABC Company is considering the purchase of a new piece of equipment costing $138,875.The equipment has a 7-year useful life and is expected to generate $24,000 in annual cost savings.ABC has a 4% required rate of return.
Required:
a.What is the internal rate of return for the equipment round to nearest factor
b.Should ABC purchase the new equipment? Why or Why not?
Unit 9-3,

Identify the factors influencing make or buy decisions.

Recognize the significance of opportunity costs and sunk costs in business decisions.

Understand the importance of effectively managing bottleneck operations to maximize production efficiency.

Comprehend the role of avoidable costs in discontinuing a business segment or product.

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Definitions:

Non-English-Speaking

Referring to individuals or communities that do not use English as their primary language.

Common Language

A language widely used among people of diverse backgrounds to communicate effectively.

English

A West Germanic language that originated from the Anglo-Frisian dialects brought to Britain during the early Middle Ages, now the primary language of international discourse.

Intercultural Competence

The ability to communicate effectively and appropriately with people of other cultures.