Question:
Bobs, Inc. is thinking about purchasing equipement costing $30,000 with a 6-year useful life. The equipment will provide cost savings of $7,300 and will be depreciated straight-line over its useful life with no salvage value. Bobs, Inc. requires a 10% rate of return. What is the approximate internal rate of return for this investment?
ALSO:
If an asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its 10-year life, and generates annual net cash inflows of $10,000 each year, what is the cash payback period?