Question - Eisler Corporation is involved in the business of injection molding of plastics. It is considering the purchase of a new computer-aided design and manufacturing machine for $428,200. The company believes that with this new machine it will improve productivity and increase quality, resulting in an increase in net annual cash flows of $98,318 for the next 6 years. Management requires a 10% rate of return on all new investments.
a. Calculate the internal rate of return on this new machine.
b. Should the investment be accepted?