The Production Department Is Proposing the Purchase of an Automatic

Multiple Choice

The production department is proposing the purchase of an automatic insertion machine. It has identified three machines, each with an estimated life of 10 years. Which machine offers the best internal rate of return??? $\begin{array}{|l|r|r|r|}\hline & \text { Machine A } & \text { Machine B } & \text { Machine C } \\\hline \text { Annual net cash flows } & \$ 50,000 & \$ 40,000 & \$ 75,000 \\\hline \text { Average investment } & 250,000 & 300,000 & 500,000 \\\hline\end{array}$

A) Machine B only
B) Machine C only
C) Machines A and B
D) Machine A only