Henries Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $113,730, including freight and installation. Henries estimated the new machine would increase the companys cash inflows, net of expenses, by $30,000 per year. The machine would have a five-year useful life and no salvage value.

1. What is the machines internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.)

2. Using a discount rate of 10%, what is the machines net present value? Interpret your results.

3. Suppose the new machine would increase the companys annual cash inflows, net of expenses, by only $27,000 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.)