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Henries Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $130,400, including freight and installation.

Henries Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $130,400, including freight and installation. Henries has estimated that the new machine would increase the companys cash inflows, net of expenses, by $25,000 per year. The machine would have a 10-year useful life and no salvage value.

Compute the machines net present value. Use a discount rate of 11%.

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