Columbia University Operations And Supply Chain Management Assignment Help - Henrie’s Drapery
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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 $130,400, including freight and installation. Henrie’s has estimated that the new machine would increase the company’s cash inflows, net of expenses, by 525,000 per year. The machine would have a 10-year useful life and no salvage value. Required: (Ignore income taxes.) 1. Compute the machine’s internal rate of return to the nearest whole percent. 2. Compute the machine’s net present value. Use a discount rate of 14%. Why do you have a zero net present value? 3. Suppose that the new machine would increase the company’s annual cash inflows, net of expenses, by only $22,500 per year. Under these conditions, compute the internal rate of return to the nearest whole percent.