Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. henries drapery service is investigating the purch

Henries Drapery Service is investigating the purchase of a new machine for cleaning and blocking...

80.2K

Verified Solution

Question

Accounting

Henries 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. Henries estimated the new machine would increase the companys 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 machines 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 machines net present value? Interpret your results.
3. Suppose the new machine would increase the companys annual cash inflows, net of expenses, by only $31,505 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%.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students