Internal Rate of Return
Metropolis Health System is considering purchasing a tractor to mow the grounds. It would cost $16950 and have a 10-year useful life. It will have zero salvage value at the end of 10 years. The head of the MHS ground crew estimated it would save $3000 per year. He figures this savings because just one of the present maintenance crew would be driving the tractor., replacing the labor of several men now using small household type lawn mowers. Compute the internal rate of return for this proposed acquisition.