Exercise $12-15($Algo$)$ Internal Rate of Return and Net Present Value $[$LO$12-2,$ LO$12-3]$

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 $12$B$-1$ and Exhibit $12$B$-2,$ 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$.0\mathrm{.}123$ should be considered as $12\%.)$

$2.$ Using a discount rate of $14\%,$ what is the machine$$s net present value? Interpret your results.

$3.$ Suppose the new machine would increase the company$$s annual cash inflows, net of expenses, by only $$31,720$ per year. Under these conditions, what is the internal rate of return? $($Round your answer to the nearest whole percentage, i$.$e$.0\mathrm{.}123$ should be considered as $12\%.)$