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UIZ for Module 8 / Chapter 7 Capital eting 1 Saved Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and

UIZ for Module 8/ Chapter 7 Capital
eting
1
Saved
Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $122,570, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $34,000 per year. The machine would have a five-year useful life and no salvage value.
Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using table.
Required:
01:29:33
1. What is the machine's internal rate of return?
Note: Round your answer to the nearest whole percentage, i.e.0.123 should be considered as 12%.
2. Using a discount rate of 12%, 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 $31,505 per year. Under these conditions, what is the internal rate of return?
Note: Round your answer to the nearest whole percentage, i.e.0.123 should be considered as 12%.
1 Internal rate of return
%
2. Net present value
%
3 Internal rate of return

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