(Ignore Income Taxes in This Problem

question 54

Essay

(Ignore income taxes in this problem.) The management of Seman Corporation is considering the purchase of a machine that would cost $41,110 and would have a useful life of 6 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $10,000 per year.
Required:
Determine the internal rate of return on the investment in the new machine. Show your work!

---

Definitions:

Materials Requirements Planning

A production planning, scheduling, and inventory control system used to manage manufacturing processes.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health.

Just-In-Time Inventory

An inventory management strategy where materials are ordered and received only as they are needed in the production process.

Demand-Dependent Inventories

Inventory levels that are maintained based on current demand forecasts, adjusting to meet fluctuations in market requirements.