Swagelok Enterprises is a manufacturer of miniature fittings and valves. Over a 5-year period, the costs associated with one product line were as follows: first cost of $30,000 and annual costs of $18,000. Annual revenue was $27,000, and the used equipment was salvaged for $4000. What rate of return did the company make on this product? (20 points) (You should use an appropriate excel function) 4.

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EXPERT ANSWER

YearCostRevenueNet Cashflow
0-30000-30000
1-18000270009000
2-18000270009000
3-18000270009000
4-18000270009000
5-180003100013000
IRR17.85%

Arrange the data as above, use IRR function and select the net cash flow which yeilds 17.85 percent