The Pearce Club, Inc., is considered investing in an exercise machine that costs $5,000

RR Tax Effects

The Pearce Club, Inc., is considered investing in an exercise machine that costs $5,000 andwould increase revenues by $1,500 a year for five years. The machine would be depreciated over its five-year useful life via the straight-line method and would have no salvage value.

Calculate the equipment’s internal rate of return. Assume that the tax rate is 30 percent. Do not enter the percent sign (%). Round your final answer to two decimal places.

Here’s the SOLUTION

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