Question:
(Ignore income taxes in this problem) Joe Flubup is the president of Flubup, Inc. He is considering buying a new machine that would cost $25,470. Joe has determined that the new machine promises an internal rate of return of 14%, but Joe has misplace the paper which tells the annual cost savings promised by the new machine. He does remember that the machine has a projected life of 12 years. Based on these data, the annual cost savings are:
a. it is impossible to determine from the given data
b. $2122.50
c. $4500.00
d. $4650.00