Question
In: Accounting
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
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 13B-1 and Exhibit 13B-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 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 $31,720 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%.)
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Solutions
ekkarill92 answered 2 years agoRelated Solutions
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
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 has
estimated that 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.
Enter the Excel formula inputs and compute the machine’s
internal rate of return.
NPER:
PMT:
PV:
FV:
Internal Rate of...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
Henrie’s Drapery Service is investigating the purchase of a new
machine for cleaning and blocking drapes. The machine would cost
$105,510, 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.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine
the appropriate discount factor(s) using table.
Required:
1. What is the machine’s internal rate...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
Henrie’s Drapery Service is investigating the purchase of a new
machine for cleaning and blocking drapes. The machine would cost
$163,700, including freight and installation. Henrie’s estimated
the new machine would increase the company’s cash inflows, net of
expenses, by $50,000 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....
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
Henrie’s Drapery Service is investigating the purchase of a new
machine for cleaning and blocking drapes. The machine would cost
$125,080, including freight and installation. Henrie’s has
estimated that 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.
Required: 1. Compute the machine’s internal rate of return.
(Round your 'IRR' answer to nearest whole percentage.)
2. Compute the machine’s net present...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
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 7B-1 and Exhibit 7B-2, to determine
the appropriate discount factor(s) using table.
Required:
1. What is the machine’s internal rate...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
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....
Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes.
Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost$137,280, including freight and installation. Henrie's has estimated that 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.
Required:
1. Compute the machine's internal rate of return to the nearest whole percent.
2. Compute the machine's net present value. Use a...
Wendell’s Donut Shoppe is investigating the purchase of a new $31,300 donut-making machine. The new machine...
Wendell’s Donut Shoppe is investigating the purchase of a new
$31,300 donut-making machine. The new machine would permit the
company to reduce the amount of part-time help needed, at a cost
savings of $5,300 per year. In addition, the new machine would
allow the company to produce one new style of donut, resulting in
the sale of 1,300 dozen more donuts each year. The company realizes
a contribution margin of $3.00 per dozen donuts sold. The new
machine would have...
Wendell’s Donut Shoppe is investigating the purchase of a new $42,700 donut-making machine. The new machine...
Wendell’s Donut Shoppe is investigating the purchase of a new
$42,700 donut-making machine. The new machine would permit the
company to reduce the amount of part-time help needed, at a cost
savings of $6,400 per year. In addition, the new machine would
allow the company to produce one new style of donut, resulting in
the sale of 2,400 dozen more donuts each year. The company realizes
a contribution margin of $2.00 per dozen donuts sold. The new
machine would have...
Wendell’s Donut Shoppe is investigating the purchase of a new $47,300 donut-making machine. The new machine...
Wendell’s Donut Shoppe is investigating the purchase of a new
$47,300 donut-making machine. The new machine would permit the
company to reduce the amount of part-time help needed, at a cost
savings of $6,300 per year. In addition, the new machine would
allow the company to produce one new style of donut, resulting in
the sale of 2,600 dozen more donuts each year. The company realizes
a contribution margin of $1.50 per dozen donuts sold. The new
machine would have...
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