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Scalia's Cleaning Service is investigating the purchase of an ultrasound machine for cleaning window blinds. The machine would cost $120,192, 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 $120,192, 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 $24,000 per year. The machine would have a 14-year useful life with no expected salvage value. (Ignore income taxes.) Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: (Leave no cells blank - be certain to enter "0" wherever required.) 1. Compute the machine's internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the nearest whole percent. (i.e., 0.123 should be considered as 12%).) Internal rate of return % 2. Compute the machine's net present value. Use a discount rate of 18%. (Round discount factor(s) to 3 decimal places.) 2. Compute the machine's net present value. Use a discount rate of 18%. (Round discount factor(s) to 3 decimal places.) 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 nearest whole percent. (i.e., 0.123 should be considered as 12%).) Internal rate of return
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