UIZ for Module $8/$ Chapter $7$ Capital

eting

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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 $$122,570,$ including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of expenses, by $$34,000$ per year. The machine would have a five$-$year useful life and no salvage value.

Click here to view Exhibit $7$B$-1$ and Exhibit $7$B$-2,$ to determine the appropriate discount factor$($s$)$ using table.

Required:

$01$:$29$:$33$

$1.$ What is the machine's internal rate of return?

Note: Round your answer to the nearest whole percentage, i$.$e$.0\mathrm{.}123$ 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 $$31,505$ per year. Under these conditions, what is the internal rate of return?

Note: Round your answer to the nearest whole percentage, i$.$e$.0\mathrm{.}123$ should be considered as $12\%.$

$1$ Internal rate of return

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$2.$ Net present value

$\%$

$3$ Internal rate of return