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Henrie's 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.
Henrie's 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. 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 138-1 and Exhibit 138-2, to determine the appropriate discount factors, using table. Required: 1 What is the machine's intemal rate of return? (Round your answer to whole decimal place le 0.123 should be considered as 12%) 2. Using a discount rate of 10%, what is the machine's net present value? Interpret your results 3. Suppose the new machine would increase the company's 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 whole decimal place le. 0.123 should be considered as 12%.) Internal rate of Net present Ivalue Internal rate of retum
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