Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $113.730, 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 128-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.) 2 Using a discount rate of 10%, what is the machine's net present value? 3. Suppose the new machine would increase the company's annual cash infiows, net of expenses, by only $27000 per year. Under these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentege.) 1. Internal rate of return 2 Net present value 3. Internal rate of return
Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $113.730, 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 128-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.) 2 Using a discount rate of 10%, what is the machine's net present value? 3. Suppose the new machine would increase the company's annual cash infiows, net of expenses, by only $27000 per year. Under these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentege.) 1. Internal rate of return 2 Net present value 3. Internal rate of return
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost
$113.730. including freight and installation. Henrie's estimated the new machine would increase the company's cash inflows, net of
expenses, by $30,0o00 per year. The machine would have a five-year useful life and no salvage value.
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
Required:
1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.)
2 Using a discount rate of 10%, what is the machine's net present value?
3. Suppose the new machine would increase the company's annual cash inflows, net of expenses, by only $27,000 per year. Under
these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentege.)
1.
Internal rate of return
2.
Net present value
3.
Internal rate of return
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