exercise 13-15 chapter 13

exercise 13-15 chapter 13

Exercise 13-15 Internal Rate of Return and Net Present Value [LO13-2, LO13-3] Henrle's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $102,990, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $30,000 per year. The machine would have a five-year useful life and no salvage value. Required: 1. What is the machine's internal rate of return? (Round your answer to whole decimal place i.e. 0.123 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 $26.475 per year. Under these conditions, what is the Internal rate of return? (Round your answer to whole decimal place le.0123 should be considered as 12%.) 1 Internal rate of return 2 Net present Value 3 Internal rate of retum Exercise 13-15 Internal Rate of Return and Net Present Value (LO13-2, LO13-3] Henrie's Drapery Service Is Investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $102,990, including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $30,000 per year. The machine would have a five-year useful life and no salvage value Required: 1. What is the machine's Internal rate of return? (Round your answer to whole decimal place i.e. 0.123 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 $26,475 per year Under these conditions, what is the internal rate of return? (Round your answer to whole decimal place i.e. 0.123 should be considered as 12%.) 1 % 2 3 Internal rate of retum Not prosent value Internal rate of return %