Booster Labs is considering acquiring new equipment that management estimates will reduce its cash operating expenses by $50,000 each year for the next five years. After five years, the company believes the equipment will be technologically obsolete and will have no salvage value. The equipment will cost $180,000 and the company will have to spend $20,000 immediately to train its staff to use the new equipment.
What is the internal rate of return of this investment project?
Please refer attached file for better understanding of formulas in MS Excel.
Initial Cash outflow = (cost of machine+training ...
The solution determines the IRR in the given case.