Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Henrle's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $102.990, including freight and installation.

image text in transcribed
Henrle's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $102.990, 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 14B1 and Exhibit 14B2, 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, l.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 $26,475 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, Le. 0.123 should be considered as 12%.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting In An Economic Context

Authors: Jamie Pratt

7th Edition

0470128828, 978-0470128824

More Books

Students also viewed these Accounting questions