Bendigo Gold Extrusions Corporation Recently Purchased a New Machine for Its

question 80

Multiple Choice

Bendigo Gold Extrusions Corporation recently purchased a new machine for its factory operations at a cost of $521 250.The investment is expected to generate $141 452 in annual cash flows for a period of six years.The required rate of return is 14%.The old machine has a remaining life of six years.The new machine is expected to have zero value at the end of the six-year period.The disposal value of the old machine at the time of replacement is zero.What is the internal rate of return?

• A)15%
• B)16%
• C)17%
• D)18%

---

Definitions:

Tax-Free Transaction

A financial transaction that does not result in a tax liability for any of the parties involved.

Fair Value

The selling price of an asset or the price to take on a liability in a coordinated market transaction at the time of measurement.

Intra-Entity Gains

Profits resulting from transactions within the same entity or between entities under common control, which are not realized in the consolidated financial statements until sold to an external party.

Initial Value Method

An accounting approach where investments are recorded at their cost at the time of acquisition without adjustment for market changes.