Question 1 - Krauth Company purchased a machine for $119,000. The machine has a life of seven years with no salvage value. It is expected that the machine will generate annual net cash inflows of $28,000 per year over its useful life. Assume Krauth Company employs a cost of capital of 10% on all capital investment projects.
The internal rate of return (IRR) on the machine is closest to:
9%
10%
12%
14%
15%
16%
Question 2 - For the most recent year, Romero Company reported average operating assets of $200,000 and sales of $500,000.
Calculate the margin Romero Company needed to earn in the most recent year in order to achieve a return on investment of 15%. Enter your answer as a number followed by the % without a space in between (i.e., 10%).