Henries Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $ including freight and installation. Henries estimated the new machine would increase the companys cash inflows, net of expenses, by $ per year. The machine would have a fiveyear useful life and no salvage value.
Click here to view Exhibit B and Exhibit B to determine the appropriate discount factors using table.
Required:
What is the machines internal rate of return?
Note: Round your answer to the nearest whole percentage, ie should be considered as
Using a discount rate of what is the machines net present value? Interpret your results.
Suppose the new machine would increase the companys annual cash inflows, net of expenses, by only $ per year. Under these conditions, what is the internal rate of return?
Note: Round your answer to the nearest whole percentage, ie should be considered as EXHIBIT B
Present Value of an Annuity of $ in Arrears;
tableeriods
