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Exercise 13-9 Internal Rate of Return and Net Present Value [LO1, LO2) Scotia Family Health Team is investigating purchasing an ultrasound machine for use in
Exercise 13-9 Internal Rate of Return and Net Present Value [LO1, LO2) Scotia Family Health Team is investigating purchasing an ultrasound machine for use in its patient clinic. The machine would cost $141,500, including invoice cost, freight, and the training of employees to operate it. Scotia has estimated that the new machine would increase the company's cash flows, net of expenses, by $25,000 per year. The machine would have a twelve-year useful life with no expected salvage value. (Ignore income taxes.) (Hint Use Microsoft Excel to calculate the discount factor(s).) Required. 1. Compute the machine's IRR. (Do not round intermediate calculations and round your final answer to nearest whole number.) Internal rate of etu 14 % 2. Compute the machine's net present value. Use a discount rate of 14%. (Do not round intermediate calculations and round your final answer to the nearest dollar amount.) Net present value 3. Suppose that the new machine would increase the company's annual cash flows, net of expenses, by only $21,700 per year. Under these conditions, compute the internal rate of return. (Do not round intermediate calculations and round your final answer to nearest whole number.) nternal rate of etu 11 %
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