Answered step by step
Verified Expert Solution
Question
1 Approved Answer
answer the required Return to question Exercise 12-15 Internal Rate of Return and Net Present Value [LO12-2, LO12-3] Henrie's Drapery Service is investigating the purchase
answer the required
Return to question Exercise 12-15 Internal Rate of Return and Net Present Value [LO12-2, LO12-3] Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $137,320, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 12B-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (Round your answer to whole decimal place i.e. 0.123 should be considered as 12%.) 2. Using a discount rate of 14 % , what is the machine's net present value? 3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $34,390 per year. Under these conditions, what is the internal rate of return? (Round your answer to whole decimal place i.e. 0.123 should be considered as 12%) Answer is complete but not entirely correct. Internal rate of return 1. 14 % 2. Net present value 3 Internal rate of return 3 5 % KPrev 1 of 7 Next MacBook Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started