Realturf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the entire $65,000 purchase price. the loan would be repaid with four equal annual payments at an interest rate of 12%/year. it is anticipated that the sprinkler system would be used for 9 years and then sold for a salvage value of $9,000. annual operating and maintenance expenses for the system over the 9-year life are estimated to be $13,000 per year. if the new system is purchased, cost savings of $25,000 per year will be realized over the present manual watering system. realturf uses a marr of 15%/year for economic decision making. show the internal rate of return used to reach your decision:

The project return is lower than the minimum accepted of 15% thus not profitable for the company

Net Present Value -1.279,86‬

Explanation:

Loan Present value

PMT of the loan:

PV65,000

time   4

rate0.12

C  $ 21,400.238

Present value at MARR:

C$21,400.24

time 4 years

rate0.15

PV$61,097.2175

Salvage value:

Salvage $9,000

time  9 years

rate  0.15000

PV   2,558.36

Cost savings present value:

Cost savings per year:           25,000

less maintenance expenses (13,000)

net cash flow                          12,000

C $ 12,000

time 9 years

rate0.15

PV$57,259.0070

Net Present Value

PV cost savings + PV salvage - PV loan payment

57,259 + 2,558.36 - 61,097.22 = -1.279,86‬

i think the answer is a. dependable person

i hope this is right!