Details of this Paper

Scalia's Cleaning Service is investigating the pur...

Description

Solution

Question

Scalia's Cleaning Service is investigating the purchase of an ultrasound machine for cleaning window blinds. The machine would cost \$136,700, including invoice cost, freight, and training of employees to operate it. Scalia's has estimated that the new machine would increase the company?s cash flows, net of expenses, by \$25,000 per year. The machine would have a 14-year useful life with no expected salvage value. (Ignore income taxes.) (refer to attched tables) Required: 1. Compute the machine?s internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return % 2. Compute the machine's net present value. Use a discount rate of 16%. (Leave no cells blank - be certain to enter "0" wherever required. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "\$" sign in your response.) Net present value \$ 3. Suppose that the new machine would increase the company's annual cash flows, net of expenses, by only \$20,000 per year. Under these conditions, compute the internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return %

Paper#8390 | Written in 18-Jul-2015

Price : \$25