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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 $151,410, 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 $151,410, including freight and installation. Henrie's has estimated that the new machine would increase the company's cash inflows, net of expenses, by $42,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. Required: 1. Compute the machine's internal rate of return to the nearest whole percent. 2. Compute the machine's net present value. Use a discount rate of 12%. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.) 3. Suppose that the new machine would increase the company's annual cash inflows, net of expenses, by only $36,930 per year. Under these conditions, the internal rate of return to the nearest whole percent
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