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Thing 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.
Thing 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. Thing has estimated the new machine would increase the company's cash inflows, net of expenses, by $40,000 per year. The machine would have a 5 -year useful life and no salvage value. Required 1. What is the machine's internal rate of return to the nearest whole percent? 2. Using a discount rate of 14%, what is the machine's net present value? What does this mean? 3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $37,150 per year. - What would be the internal rate of return to the nearest whole percent? - What would be the machine's net present value given a discount rate of 9%
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