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Question
LaSalle Industries is considering the purchase of a new strapping machine, which will cost $150,000, plus an additional $10,500 to ship and install. The new machine will have a 5-year useful life and will be depreciated to zero using the straight-line method. The machine is expected to generate new sales of $45,000 per year and is expected to save $16,000 in labor and electrical expenses over the next 5-years. The machine is expected to have a salvage value of $20,000. LaSalle's income tax rate is 35%. What is the machine's IRR?A) 15.75%
B) 18.86%
C) 19.15%
D) 20.03%
Answer
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