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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 $137,320, 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 $137,320, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 781 and Exhibit 782, to determine the appropriate discount factor(s) using table Required: 1. What is the machine's internal rate of return? Note: Round your onswer to the nearest whole percentage, i.e. 0.123 should be considered as 12%. 2. Using a discount rate of 14%, 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 537150 per year Under these conditions, what is the internal rate of return? Note: Round your answer to the neorest whole percentoge, i.e. 0.123 should be considered as 12%
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