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Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cot $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 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (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 $32,330 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.) 1. Internal rate of return % Net present value Internal rate of return 2. 3. < Prev 7 of 11 Next >

Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cot $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 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (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 $32,330 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.) 1. Internal rate of return % Net present value Internal rate of return 2. 3. < Prev 7 of 11 Next >

Essentials Of Investments
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
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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 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (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 $32,330 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.) es 1. Internal rate of return % 2. Net present value 3. Internal rate of return % < Prev 7 of 11 Next > nere to search
Transcribed Image Text: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 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (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 $32,330 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.) es 1. Internal rate of return % 2. Net present value 3. Internal rate of return % < Prev 7 of 11 Next > nere to search
EXHIBIT 14B-1 PreSent Value of $t; a Periods 23% 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.806 0.800 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0,743 0.731 0,718 0.706 0.694 0.683 0.672 0.661 0.650 0.640 3. 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.822 0.784 0.747 0,713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.790 0,746 0,705 0.666 0,630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.303 0.289 0.275 0.262 7 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.249 0.235 0.222 0.210 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0,351 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0.204 0.191 0.179 0.168 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0134 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 12 0.625 11 0.195 0.178 0.162 0148 0.135 0.123 0.112 0.103 0.094 0.086 0.557 0.497 0,444 0.397 0.356 0.319 0.286 0,257 0.231 0.208 0.187 0.168 0.152 0.137 0124 0.112 0.102 0.092 0.083 0.076 0.069 0.104 0.093 0.084 0.075 0.068 0.061 0.055 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.074 0.065 0.057 0.051 0.045 0.040 0.035 13 0,601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0141 0.125 0.11 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 16 0.534 0.458 0.394 0.339 0.292 0.252 0.218. 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.108 0.095 0.081 0.069 0.059 0.051 17 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.093 0.080 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0.044 0.038 0.032 0.028 0.024 0.021 0.037 0.031 0.027 0.023 0.020 0.017 0.031 0.026 0.022 0.019 0.016 0.014 18 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.018 19 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.060 0.051 0.043 0.014 20 0.456 0.377 0.312 0.258 0.215. 0.178 0.149 0.124 0104 0.087 0.073 0.061 0.051 0.043 0.037 0.012 0.439 0.359 0.294 0.242 0199 0.422 0.342 0.278 0.226 0.184 0.406 0.326 0.262 0.211 0.390 0.310 0.247 0.197 0.375 0.295 0.233 21 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 22 0.150 0.123 0.101 0.015 0.013 0.011 0.009 0.007 0.091 0.012 0.010 0.009 0.007 0.006 0.010 0.008 0.007 0.006 0,005 0.009 0.007 0.006 0.005 23 0.170 0.138 0.112 24 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 25 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.004 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.009 0.007 0,006 0.0005 0,004 0.003 0.060 0.047 0.037. 0.029 0.023 0.018 0.014 0.011. 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.044 0.033 0.026 0.020 0,015 0.012 0.009 0.007 0.0050.004 0.003 0.003 0.002 0.002 0.001 26 0.361 0.281 0.220 0.172 0135 0.106 0.011 27 0.347 0.268 0.207 0161 0.125 0.098 0.076 28 0.333 0.255 0.196 0.150 0.116 29 0.321 0.243 0185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022. 0.017 30 0.308 0.231 0174 0.131 0.099 0.075 0.057 40 0.208 0142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 search a
Transcribed Image Text:EXHIBIT 14B-1 PreSent Value of $t; a Periods 23% 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.806 0.800 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0,743 0.731 0,718 0.706 0.694 0.683 0.672 0.661 0.650 0.640 3. 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.822 0.784 0.747 0,713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.790 0,746 0,705 0.666 0,630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.303 0.289 0.275 0.262 7 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.249 0.235 0.222 0.210 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0,351 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0.204 0.191 0.179 0.168 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0134 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 12 0.625 11 0.195 0.178 0.162 0148 0.135 0.123 0.112 0.103 0.094 0.086 0.557 0.497 0,444 0.397 0.356 0.319 0.286 0,257 0.231 0.208 0.187 0.168 0.152 0.137 0124 0.112 0.102 0.092 0.083 0.076 0.069 0.104 0.093 0.084 0.075 0.068 0.061 0.055 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.074 0.065 0.057 0.051 0.045 0.040 0.035 13 0,601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0141 0.125 0.11 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 16 0.534 0.458 0.394 0.339 0.292 0.252 0.218. 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.108 0.095 0.081 0.069 0.059 0.051 17 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.093 0.080 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0.044 0.038 0.032 0.028 0.024 0.021 0.037 0.031 0.027 0.023 0.020 0.017 0.031 0.026 0.022 0.019 0.016 0.014 18 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.018 19 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.060 0.051 0.043 0.014 20 0.456 0.377 0.312 0.258 0.215. 0.178 0.149 0.124 0104 0.087 0.073 0.061 0.051 0.043 0.037 0.012 0.439 0.359 0.294 0.242 0199 0.422 0.342 0.278 0.226 0.184 0.406 0.326 0.262 0.211 0.390 0.310 0.247 0.197 0.375 0.295 0.233 21 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 22 0.150 0.123 0.101 0.015 0.013 0.011 0.009 0.007 0.091 0.012 0.010 0.009 0.007 0.006 0.010 0.008 0.007 0.006 0,005 0.009 0.007 0.006 0.005 23 0.170 0.138 0.112 24 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 25 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.004 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.009 0.007 0,006 0.0005 0,004 0.003 0.060 0.047 0.037. 0.029 0.023 0.018 0.014 0.011. 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.044 0.033 0.026 0.020 0,015 0.012 0.009 0.007 0.0050.004 0.003 0.003 0.002 0.002 0.001 26 0.361 0.281 0.220 0.172 0135 0.106 0.011 27 0.347 0.268 0.207 0161 0.125 0.098 0.076 28 0.333 0.255 0.196 0.150 0.116 29 0.321 0.243 0185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022. 0.017 30 0.308 0.231 0174 0.131 0.099 0.075 0.057 40 0.208 0142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 search a
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