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(Solution Download) Scalia's Cleaning Service is investigating the purchase of an ultrasound machine for cleaning...


 

 

 

 

 

 

 

Scalia's Cleaning Service is investigating the purchase of an

 

ultrasound machine for cleaning window blinds. The machine would

 

cost $127,460, including invoice cost, freight, and training of

 

employees to operate it. Scalia's has estimated that the new

 

machine would increase the companyAc??cs cash flows, net of expenses,

 

by $20,000 per year. The machine would have a 17-year useful life

 

with no expected salvage value. (Ignore income taxes.)

 

 

 

 

 

 

 

 

 

Click here to view Exhibit 13B-2, to determine the appropriate

 

discount factor(s) using table.

 

 

 

 

 

 

 

 

Required:

 

 

 

 

 

 

 

 

1.

 

Compute the machineAc??cs 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

 

14%. (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 $15,000 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

%

 


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