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 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using table.
Required:
1. What is the machine’s internal rate of return?
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 $34,390 per year. Under these conditions, what is the internal rate of return?
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ekkarill92 answered 1 year 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
$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...
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
$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...
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Wendell’s Donut Shoppe is investigating the purchase of a new $47,300 donut-making machine. The new machine...
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company to reduce the amount of part-time help needed, at a cost
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