Question
Scalia's Cleaning Service is investigating the purchase of an ultrasound machine for cleaning window blinds. The machine would cost $136,700, including invoice cost, freight, and
Scalia's Cleaning Service is investigating the purchase of an ultrasound machine for cleaning window blinds. The machine would cost $136,700, including invoice cost, freight, and training of employees to operate it. Scalia's has estimated that the new machine would increase the company?s cash flows, net of expenses, by $25,000 per year. The machine would have a 14-year useful life with no expected salvage value. (Ignore income taxes.) (refer to attched tables) Required: 1. Compute the machine?s internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return % 2. Compute the machine's net present value. Use a discount rate of 16%. (Leave no cells blank - be certain to enter "0" wherever required. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Net present value $ 3. Suppose that the new machine would increase the company's annual cash flows, net of expenses, by only $20,000 per year. Under these conditions, compute the internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return %
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