Business
Business, 17.04.2020 23:04, mostman077

.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.

a. Compute the machine’s internal rate of return to the nearest whole percent.

b. Compute the machine’s net present value. Use a discount rate of 14%. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.)

c. Suppose that the new machine would increase the company’s annual cash inflows, net of expenses, by only $25,790 per year. Under these conditions, compute the internal rate of return to the nearest whole percent.

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