Solve the below:
Q1 Maggie Green just borrowed $5,000. She is planning to pay it back in 5 equal installments of $1, 200. What is the IRR?
Q2: Rick Grimes and Daryl Dixon are evaluating an investment in a hydraulic press for a stamping operation. The initial cost of the press is $400,000 and is expected to have a useful life of 10 years. Maintenance costs will be $20,000 per year. The hydraulic press will also increase stamping output and reduce labour; saving the company $10,000 in the first year, $30,000 in year 2, and $75,000 in each subsequent year. The equipment has a salvage value of $15,000. If the company's MARR is 15%, should the partners recommend this project go ahead?
Q3: In question 2, would the recommendation change if the yearly savings were determined to be 25% higher?
Q4: Winterfell Tool and Die may buy a new milling machine. The engineer has determined the following data:
Initial cost $15,500
Operating cost/yr $7,300
Savings/yr $11,600
Useful life 5 years
Slavage value Nil
What is the IRR of this investment? If Winterfell has a MARR of 8%, should this project go forward?