Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
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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 $151,410, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $42,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 148-1 and Exhibit 148-2. 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, l.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 $36.930 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, l.e. 0.123 should be considered as 12%.) 1. Internal rate of return 2. Net present value 3. Internal rate of return 96 Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $151,410, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $42,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 148-1 and Exhibit 148-2. 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, l.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 $36.930 per year. Under these conditions, what is the internal rate of return? (Round your answer to the nearest whole percentage, l.e. 0.123 should be considered as 12%.) 1. Internal rate of return 2. Net present value 3. Internal rate of return 96
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Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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