Internal rate of return


Problem:

Hincapie Manufacturing is evaluating investing in a new metal stamping machine costing $30,924. Hincapie estimates that it will realize $12,000 in annual cash inflows for each year of the machine's 3-year useful life.

Approximately, what is the internal rate of return (IRR) for the machine? (Use present value tables or Excel.)

Explain comprehensively and provide step by step solution.

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Finance Basics: Internal rate of return
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