Henrie's 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. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.) 2. Using a discount rate of 14%, what is the machine's net present value? 3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $37,150 per year. Under these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentage.)
Henrie's 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. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.) 2. Using a discount rate of 14%, what is the machine's net present value? 3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $37,150 per year. Under these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentage.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Exercise 12-15 Internal Rate of Return and Net Present Value [LO12-2, LO12-3]
Henrie's 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. Henrie's estimated the new machine would increase the company's cash inflows, net of
expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value.
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
Required:
1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.)
2. Using a discount rate of 14%, what is the machine's net present value?
3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $37,150 per year. Under
these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentage.)
ces
1. Internal rate of return
2. Net present value
3. Internal rate of return
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Transcribed Image Text:Exercise 12-15 Internal Rate of Return and Net Present Value [LO12-2, LO12-3]
Henrie's 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. Henrie's estimated the new machine would increase the company's cash inflows, net of
expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value.
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
Required:
1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.)
2. Using a discount rate of 14%, what is the machine's net present value?
3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $37,150 per year. Under
these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentage.)
ces
1. Internal rate of return
2. Net present value
3. Internal rate of return
Graw
Prey
6 of 6
Next
10
tv
MacBook Air
80
DII
DD
F1
F3
F4
FS
F6
F7
FB
F9
F10
@
2#
$
%
&
*
3
4
6
7
-
Q
W
E
R
T
Y
U
{
S
D
F
J
K
C.
V
N
く
?
command
command
ontion
.. ..
レ
「この
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