Henrie's Drapery Service is investigating the purchase of a new
machine for cleaning and blocking drapes. The machine would
cost $ including freight and installation. Henrie's estimated
the new machine would increase the company's cash inflows, net
of expenses, by $ per year. The machine would have a
fiveyear useful life and no salvage value.
Required:
What is the machine's internal rate of return? Note: Round
your answer to the nearest whole percentage.
Using a discount rate of what is the machine's net present
value? Interpret your results.
Suppose the new machine would increase the company's
annual cash inflows, net of expenses, by only $ per year.
Under these conditions, what is the internal rate of
return? Note: Round your answer to the nearest
whole percentage.
