henrie drapery services is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $$102,990,$ including freight and installation. Henrie$$s estimated the new machine would increase the company$$s cash inflows, net of expenses, by $$30,000$ per year. The machine would have a five$-$year useful life and no salvage value.Click here to view Exhibit $7$B$-1$ and Exhibit $7$B$-2,$ to determine the appropriate discount factor$($s$)$ using table.

 

 

Required:

What is the machine$$s internal rate of return?

Note: Round your answer to the nearest whole percentage, i$.$e$.0\mathrm{.}123$ should be considered as $12\%.$

Using a discount rate of $14\%,$ what is the machine$$s net present value? Interpret your results.

Suppose the new machine would increase the company$$s annual cash inflows, net of expenses, by only $$26,475$ per year. Under these conditions, what is the internal rate of return?

Note: Round your answer to the nearest whole percentage, i$.$e$.0\mathrm{.}123$ should be considered as $12\%.$

Answer rating: 100% (QA)

1 To calculate the internal rate of return IRR set the net present value equal to 0 and solve for th... View the full answer