Posted: March 3rd, 2017

John’s Arcade is planning on purchasing a virtual reality simulator for $ 210,000. The simulator estimated services life is seven year with a residual value of $25,000.

John’s Arcade is planning on purchasing a virtual reality simulator for $ 210,000. The simulator estimated services life is seven year with a residual value of $25,000. The simulator is expected to bring in $40,000 per year after expenses. Compute the internal rate of return on the simulator. If John wanted to get a 13% internal rate of return, waht would the annual cash flows need to be in order generate this rate of return?