Acompany projects an increase in net income of $193500 each year for the next five years if it invests $9 in new equipment. the equipment has a 5-year life and an estimated salvage value of $3. what is the annual rate of return on this investment?

The Internal Rate of Return (IRR)10,74%

Explanation:

We use excel or a spreadsheet to calculate this ratio. See document attached.

We use a cash flow to solve this problem.

At moment 0 we have the investment cost , in this case $900000. From period 1 to period 5, we have incomes o benefits of $1935000.

At period 5 we have to consider the estimated salvage value of $300000.

Then, we calculate the Net cash flow that is the difference between benefits and cost.

We use all the result (positive and negative) in Net cash flow to get the IRR.  

these are the four factors that influence enterpreneurship development

1. economic development

2. culture

3.technological development

4. education