Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $170,595, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $45,000 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 the nearest whole percentage, i.e. 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 $40,500 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, l.e. 0.123 should be considered as 12%.) 1. Internal rate of retum % 2. Net present value 25 3. Internal rate of retum % EXHIBIT 12B-1 Present Value of $1. 1 Periods 4% 5% 6% 7% 1 0962 0.952 0.943 0.935 2 0.925 0.907 0890 0.873 3 0859 0364 0.840 0.816 4 0.855 0.823 0.792 0.763 5 0822 0.784 0.747 0.713 6 0.790 0.746 0.705 0.666 7 0.760 0711 0.731 0.677 9 0.703 0.645 10 0.676 0.614 0558 11 12 0.625 13 0601 14 15 16 17 0.513 0436 0.371 18 0494 0.416 0.350 19 0475 0.396 0331 20 0456 0377 0312 0.104 0.087 21 0439 0.359 0.294 0.135 0.112 0.093 0.077 22 23 24 25 26 27 28 29 30 40 18% 14% 15% 16% 12% 17% 13% 9% 11% 10% 8% 0.847 0.340 0.833 0.826 0.926 0917 0.909 0.901 0.893 0885 0.877 0870 0362 0855 0.672 0.661 0.650 0.640 0857 0.842 0826 0812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0537 0524 0512 0.675 0.658 0641 0624 0.609 0593 0.579 0.564 0.551 0.731 0.712 0.693 0.794 0.772 0.751) 0.499 0.482 0.467 0.451 0437 0423 0410 0659 0.708 0683 0.636 0.613 0.572 0.552 0534 0316 0.592 0.735 0328 0.370 0.355 0.341 0402 0.386 0497 0476 0.456 0437 0419 0567 0.543 0519 0.681 0650 0.621 0.593 0.303 0.289 0.275 0.262 0.630 0396 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.249 0.235 0222 0210 0 665 0623 0.583 0.547 0513 0.452 0425 0.400 0376 0.354 0.333 0.314 0.296 0.279 0.263 0.482 0.191 0.179 0.1681 0327 0.305 0.285 0.266 0.249 0.233 0.218 0.204 0.404 0.376 0.351 0627 0.582 0.540 0.502 0467 0434 0.243 0.209 0.155 0.144 0.134 0.225 0.284 0.263 0.194 0.180 0.167 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.508 0463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.135 0.123 0.112 0.103 0.094 0.086 0.162 0.148 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0650 0.585 0327 0475 0429 0.388 0.187 0.286 0.257 0.231 0.208 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0319 0.557 0497 0444 0.397 0356 0.075 0.093 0.084 0.130 0.116 0.104 0.145 0.530 0.469 0415 0.368 0.326 0.290 0.258 0.229 0204 0.182 0.163 0.062 0.055 0.049 0.044 0.099 0.078 0069 0.111 0.068 0.160 0.141 0.125 0.577 0505 0442 0.263 0.232 0.205 0.181 0.388 0.340 0.299 0.045 0.051 0.040 0.035 0074 0.084 0.065 0.057 0.095 0.209 0.183 0.160 0.140 0.123 0.108 0481 0417 0362 0.315 0.275 0.239 0.555 0.042 0.036 0.032 0.028 0.062 0.054 0.047 0.071 0.123 0.093 0081 0.163 0.107 0.292 0.252 0.218 0.188 0.141 0534 0458 0.394 0.339 0.023 0060 0052 0.045 0.039 0.034 0.030 0.026 0.080 0.069 0.170 0.146 0.125 0.108 0.093 0317 0.270 0231 0.198 0.032 0028 0.038 0.018 0.024 0.021 0044 0.069 0095 0.081 0.059 0.051 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.023 0.037 0.031 0.027 0.020 0.017 0014 0.060 0051 0043 0.083 0.070 0232 0.116 0098 0.277 0.194 0.164 0.138 0.016 0.014 0.026 0.022 0.019 0.061 0.031 0.051 0.043 0.037 0.073 0.178 0.258 0.215 0.149 0.124 0013 0011 0.015 0.018 0044 0037 0031 0.064 0.026 0.022 0053 0.242 0.199 0.164 0.038 0.022 0.018 0015 0013 0.011 0.009 0083 0.068 0.032 0.026 0.056 0046 0.123 0.101 0.422 0.342 0.278 0.226 0.184 0.150 0033 0.018 0.049 0.040 0.027 0.022 0060 0015 0.012 0.010 0.009 0.007 0.406 0.326 0211 0.170 0.138 0262 0.112 0.091 0.074 0.008 0013 0.010 0.007 0.006 0.005 0082 0.066 0023 0019 0015 0.053 0.043 0.035 0.028 0.390 0310 0.247 0.158 0.126 0.102 0.197 0.007 0.047 0038 0030 0024 0.020 0016 0.116 0092 0.074 0.059 0.375 0.295 0.233 0.184 0.146 0.021 0.017 0.014 0042 0.033 0.026 0.106 0361 0.281 0.220 0.172 0.135 0084 0.066 0.053 0014 0.023 0018 0011 0037 0.029 0347 0268 0.207 0.161 0.125 0.098 0.076 0060 0.047 0.006 0.005 0.004 0.003 0.008 0033 0026 0.020 0016 0.012 0.010 0.333 0.255 0.196 0.150 0.116 0.000 0.069 0.054 0042 0.006 0005 0.011 0.008 0.004 0.002 0.003 0.002 0.321 0243 0.185 0.029 0.022 0.017 0.014 0.141 0.107 0082 0.063 0.048 0037 0.003 0.004 0.003 0.009 0.007 0.005 0.002 0.002 0.001 0044 0033 0.026 0020 0015 0012 0.308 0.231 0.174 0.131 0099 0075 0.057 0.000 0.000 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.208 0.142 0097 0067 0046 0.032 0.022 0015 0011 0.008 0.005 19% 20% 21% 22% 23% 25% 24% 0.820 0813 0.806 0.800 0.083 0.076 0069 0.068 0.061 0055 0012 0.009 0.007 0.006 0013 0.010 0.009 0006 0.005 0.004 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.002 EXHIBIT 128-2 Present Value of an Annuity of $1 in Arrears, 1/(1-(1/(1+r)^n)) Periods 4% 5% 0.962 0.952 6% 0.943 2 1886 1.859 1833 7% 8% 0.935 0.926 1.808 1.783 10% 11% 3 2.775 2.723 2.673 2.624 2.577 + 3.630 3.546 3.465 3.387 S 4452 4.329 4212 4.100 6 5.242 5.076 4917 4.767 7 6.002 5.786 5.582 5.389 8 6.733 6.463 6.210 5971 5.206 5.033 5.747 5.535 9 7435 7.108 6.802 6515 6247 5995 10 8.111 7.722 7.360 7.024 6.710 6.418 8.760 8.306 7.887 7.499 7.139 6.805 12 9385 8.863 8.384 7.943 7536 13 9986 9.394 88531 8358 14 10.563 9.899 9.295 8.745 7.904 8.244 15 11.118 10.380 9.712 9.108 16 17 18 19 20 21 8.649 22 8.772 23 8883 24 8.985 25 26 27 28 29 30 40 24% 25% 20% 23% 21% 22% 19% 16% 17% 18% 14% 15% 12% 13% 9% 0.800 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.917 0909 0.901 0.893 0.885 1.547 1.528 1509 1.492 1.474 1457 1440 1.668 1.647 1626 1.605 1.585 1.566 1.759 1.736 1.713 1690 2074 2.042 2011 1.981 1952 2.487 2444 2.5311 2.402 2361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2.798 2.743 2.914 2.855 2.690 2.639 2.589 2.540 2.494 2448 2.404 3.037 2.974 3.312 3240 3.170 3.102 3.127 3058 2.991 2.926 2.864 2.803 3.517 3433 3.352 3.274 3.199 3.993 3390 3.791 3.696 3.605 3.092 3.326 3.245 3.167 3.020 2.951 3.498 3410 4.623 4.486 3.889 3.784 3.685 3.589 4.355 4.231 4.111 3.998 3.416 3.327 3.242 3.161 3.605 3.508 4.039 4.868 4.712 4.564 4.423 4.288 3.922 3.812 3.706 4.160 4487 4.344 4.207 4.078 3.954 3.837 3.726 5.335 5.146 4.968 4.799 4.639 4.163 4.031 3.905 3.566 3.463 3.786 3.673 5.759 5.537 5328 5.132 4.946 4.772 4.607 4451 4.303 3.923 3.799 3.682 3.571 6.145 5.889 5.650 5.426 5.216 5019 4.833 4.659 4.494 4.339 4.192 4.054 4.035 3.902 3.776 3.656 4.656 4.486 4.327 4.177 4.836 5938 5.687 5453 5.234 5.029 6495 6.207 3.851 3.725 4.439 4.278 4.127 3.985 4.988 4.793 4.611 5.660 5421 5.197 7.161 6.814 6.492 6.194 5.918 4.053 3.912 3.780 4910 4.715 4533 4.362 4.203 7487 7.103 6.750 6.424 6.122 5.842 5583 5.342 5.118 4.611 4.432 4.265 4.108 6.982 6.628 7.786 7.367 6.302 6002 5.724 5468 5229 5.008 4.802 4.675 4489 4315 4.153 5.092 4.876 5.575 5324 6.142 5.847 6.462 7.606 7.191 6311 8559 8.061 4.189 4.357 5.162 4.938 4.730 | 4536 8.851 8.313 11.652 10.838 10.106 9447 6.265 5.954 5.668 5.405 7.824 7379 6.974 6.604 4.391 12.166 11.274 10477 9.763 9.122 8.544 8.022 7549 7.120 6.729 6.373 6047 5.749 5.475 5.222 4.990 4.775 4.576 7.702 7.250 6.840 6.467 6.128 5.818 5534 5.273 5.033 4.812 4.608 4.419 4.243 12.659 11.690 10.828 10.059 9.372 8.756 8.201 4.442 4.263 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 4.657 4.460 4.279 4.870 5353 5.101 6.623 6.259 5929 5628 9.129 8514 7.963 7.469 7025 13.590 12.462 11470 10.594 9818 4.476 4.292 8075 7562 5.665 5.384 5.127 4.891 4.675 7.102 6687 6312 5.973 14.029 12.821 11.764 10.836 10.017 9.292 6.359 8.176 7.645 7.170 6.743 6.011 5.696 5410 5.149 4.909 4.690 4.488 4.302 14451 13.163 12.042 11.061 10.201 9442 4311 4.703 4499 6.044 5.723 5432 5.167 4.925 8.266 7.718 7.230 6.792 6.399 14.857 13489 12.303 11.272 10.371 9.580 4318 4.143 4937 4.713 4.507 6434 6.073 5.746 5451 5.182 8.348 7.784 7.283 6.835 15.247 13.799 12.550 11 469 10.529 9.707 4.948 6.097 5.766 5.467 5.195 7.330 6.873 6464 4.721 4.514 4.323 4.147 8422 7843 9.077 15.622 14 094 12.783 11.654 10.675 9.823 4.520 4.328 4.151 6.491 6.118 5.783 8.488 7.896 7.372 6.906 5.480 5.206 4.956 4.728 9.161 15.983 14.375 13.003 11.326 10.810 9.929 6.514 4.964 4524 5.798 5.492 5.215 4.332 4.154 6.136 4.734 8.548 7.943 7.409 6.935 16.330 14.643 13.211 11.987 10.935 10.027 9.237 4.970 4.739 4528 4.335 4.157 3.992 8.602 7.984 6.152 5.810 5.502 5.223 7441 6.961 6.534 16.663 14.898 13.406 12.137 11.051 10.116 9.307 3.994 5.820 5510 5229 4.975 4.743 4.531 4337 4.159 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7470 6983 6.551 6.166 6.566 8.694 4.339 8.055 7496 7.003 5.829 5517 5235 4979 4.746 4534 4.160 3.995 6.177 17.292 15.372 13.765 12.409 11.258 10.274 9427 5.258 7.634 7.105 6642 6.233 5871 5.548 4,760 4544 4.347 4.166 | 3.999 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8951 8.244 2.362 2.745 2.689 3.619 3518 3421 3.329 3.962 3.824 4.001 3.859 4.033 3.887 4.219 4.059 3910 4,080 3.928 4.097 3.942 4.110 3.954 4.121 3963 4.130 3.970 4.137 3.976 3.981 3985 3.988 3.990 4.997