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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 $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 14B-1 and Exhibit 14B-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 the nearest whole percentage, 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. bv only Prev 4 of 4 Next > Required: 1. What is the machine's internal rate of return? (Round your answer to the nearest whole percentage, 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 the nearest whole percentage, i.e. 0.123 should be considered as 12%.) 1. Internal rate of return % 2. Net present value 3. Internal rate of return % EXHIBIT 148-1 Present Value of $1 + Periods 4% 5% 1 2 6% 7% 8% 9% 0.962 0.952 0.943 0.935 0.926 0.917 0.925 0.907 0.890 0.873 0857 0.842 3 4 5 6 7 8 9 10 10% 11% 12% 13% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 0.826 0.812 0.797 0783 0769 0.756 0743 0731 0.718 0706 0.694 0.683 0.672 0.661 0.650 0.640 0.889 0.864 0.840 0.816 0794 0.772 0751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0792 0.763 0735 0708 0.683 0.659 0.636 0613 0.592 0572 0552 0534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0341 0.328 0.790 0746 0705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0432 0.410 0.390 0370 0.352 0.335 0319 0.303 0.289 0.275 0.262 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0296 0.279 0.263 0.249 0.235 0.222 0.210 0.731 0.677 0627 0.582 0.540 0502 0.467 0434 0404 0376 0.351 0.327 0305 0.285 0.266 0.249 0233 0.218 0204 0191 0179 0168 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0167 0.155 0144 0134 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0295 0.270 0.247 0227 0208 0191 0176 0162 0149 0137 0126 0116 0107 11 12 13 0.650 0.585 0527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0237 0.215 0195 0178 0.162 0.625 0.557 0.497 0444 0.397 0.356 0319 0.286 0.257 0231 0.208 0.187 0.001 0.530 0.469 0.415 0.368 0326 0.290 0258 0.229 0204 0182 0163 14 15 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0181 0160 0.555 0.481 0.417 16 17 0.513 0.436 0.371 0.317 0.270 0.231 0198 18 19 0.494 0.416 0.350 0.296 0.250 0.212 0180 0.475 0.396 0.331 0.277 0.232 0194 0170 0153 0164 0138 20 0.456 0.377 0.312 0.258 0.215 0.178 0149 0124 21 0.439 0359 0.294 0242 0199 0164) 0135 0112 22 0.422 0342 0.278 0.226 0184 0.150 0123 0:101 23 0.406 0326 0262 0.211 0170 0138 24 25 26 29 30 0.361 0281 0.220 0172 27 0.347 0.268 0.207 0161 28 0.333 0.255 0.196 0150 0.321 0.243 0.185 0.141 0.308 0.231 0174 0131 40 0.141 0362 0.315 0.275 0239 0.209 0.183 0150 0140 0.123 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0123 0307 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0146 0125 0108 0.093 0.000 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0130 011 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 0.116 0.098 0.063 0.070 0.060 0.051 0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.014 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.012 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.083 0068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 0.112 0.091 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 0.012 0.010 0.009 0.007 0.006 0.390 0.310 0.247 0.197 0158 0126 0102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 0.375 0.295 0.233 0184 0146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.009 0.007 0.006 0.005 0.004 0135 0106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0125 0.098 0.076 0.060 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0116 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.107 0.082 0.063 0.046 0.037 0.029 0.022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.0011 0.208 0142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0148 0135 0123 0.112 0103 0.094 0.086 0168 0152 0137 0124 0.112 0102 0.092 0.083 0.076 0.069 0145 0130 0116 0104 0.093 0.084 0.075 0.068 0.061 0.055 0125 0:1 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0108 0.095 0.084 0.074 0.065 0.057 0.051 0.045 0.040 0.035 Periods 4% 5% 6% 1 0.962 0.952 0.943 0.935 2 1.886 1859 1.833 1.808 7% 8% 0.926 1783 9% 0.917 1759 EXHIBIT 148-2 Precent Value of an Annuity of $1 in Arrears; [1] 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1736 1713 1.690 1.668 1.647 1626 1.605 1.585 1.566 1.547 1528 1509 1492 1.474 1457 1440 3 2.775 2723 2.673 2624 2.577 4 3630 3546 3.465 3.387 3.312 5 4.452 4.329 4.212 4300 3.993 2.531 3.240 3.890 6 5.242 5.076 4.917 7 6.002 5.786 5.582 8 9 10 4.486 5.206 5.033 6.733 6.463 6.210 5.971 5747 5.535 7435 7108 6.802 6.515 6.247 5.995 8.111 7722 7.360 7.024 6.710 6.418 4767 4.623 5.389 11 12 13 9.986 9.394 8.853 14 10.563 9.899 9.295 15 11118 10.380 9.712 9108 16 11.652 10.838 10.106 17 12.166 11274 10.477 18 19 13134 12.085 11.158 20 13.590 12.462 11.470 21 22 23 24 14.057 13.489 12.303 11.272 15.247 13.799 12.550 11.469 8.760 8.306 7887 7499 7139 6.905 9.385 8.863 8.384 7943 7.536 7161 7.904 7.487 8.244 7786 8.559 8.061 8.851 8.313 9122 8.544 12.659 11690 10.828 10.059 9.372 8.756 10.336 9.604 8.950 10.594 9.818 9129 14.029 12.821 11.764 10.836 10.017 9.292 14.451 13163 12.042 11.061 10.201 9.442 10.371 9.500 10.529 9.707 8.358 8.745 9.447 9.763 25 15.622 14.094 12783 11.654 10.675 9.823 26 27 15.983 14.375 13.003 11.826 10.810 9.929 16.330 14.643 13.211 11.987 10.935 10.027 28 29 30 40 2.487 2444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2140 2106 2074 2042 2011 1981 1952 3170 3102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2494 2.448 2.404 2.362 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2745 2.689 4.355 4.231 4111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3367 3.092 3.020 2.951 4.868 4712 4564 4423 4.288 4160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3101 5.335 5146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3726 3.619 3518 3.421 3.329 5.759 5.537 5.328 5132 4.946 4772 4.607 4,451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 6145 5.889 5.650 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4192 4.054 3.923 3.799 3.682 3.571 6.495 6.207 5.938 5.667 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4177 4.035 3.902 3.776 3.656 6.814 6.492 6194 5.918 5.660 5.421 5197 4.988 4793 4.611 4.439 4.278 4127 3.985 3.851 3.725. 7103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780) 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 4.432 4.265 4108 3.962 3.824 7606 7191 6.811 6.462 6142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4.315 4153 4.001 3.859 7.824 7379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4938 4730 4.536 4.357 4189 4.033 3.887 8.022 7.549 7120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910 8.201 7702 7250 6.840 6.467 6128 5.818 5.534 5.273 5.033 4.812 4.608 4.419 4.243 4.080 3.928 8.365 7839 7366 6.938 6.550 6196 5.877 5584 5.316 5.070 4.843 4.635 4.442 4.263 4.097 3.942 8.514 7963 7469 7025 6.623 6.259 5.929 5.628 5.353 5101 4.870 4.657 4.460 4.279 4.110 3.954 8.649 8.075 7562 7102 6,687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4121 1.963 8.772 8176 7.645 7170 6.743 6.359 6.011 5.696 5.410 5149 4.909 4.690 4.488 4.302 4.130 3.970 8.883 8.266 7718 7.230 6.792 6.399 6.044 5723 5.432 5167 4.925 4703 4.499 4.311 4137 3.976 8.905 8.348 7784 7283 6.835 6434 6.073 5746 5.451 5182 4.937 4713 4.507 4.318 4143 3.981 9.077 8.422 7843 7330 6.873 6.464 6.097 5766 5.467 5195 4.948 4.721 4.514 4.323 4147 3.985 9161 8.488 7896 7372 6.906 6.491 6.118 5783 5.480 5.206 4.956 4728 4.520 4.328 4151 3.988 9.237 8.548 7943 7409 6.935 6.514 6136 5.798 5.492 5.215 4.964 4734 4.524 4.332 4154 3.990 16.663 14.898 13.406 12:137 11.051 10116 9307 8.602 7984 7441 6.961 6.534 6152 5.810 5.502 5.223 4.970 4739 4.528 4.335 4157 3992 16.984 15.141 13.591 12.278 11158 10.198 9.370 8.650 8.022 7470 6.983 6.551 6166 5.820 5.510 5.229 4.975 4.743 4.531 4.337 4.159 3.994 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4746 4.534 4.339 4160 3.995 19.793 17159 15.046 13.332 11925 10.757 9779 8.951 8.244 7634 7305 6.642 6233 5871 5.548 5.258 4.997 4760 4544 4347 4166 3.999

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