21-22 Capital budgeting methods, no income taxes. Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accu- mulated regarding the new machine is: Cost of the machine $80,000 Increased annual contribution margin $15,000 bio Life of the machine 10 years Required rate of return 6% mani omwollot Yummy estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. 1. Discounted Payback Period Period Cash Savings Discount Factor (6%) Discounted Cumulative Cash Savings Discounted Cash Savings Unrecovered Investment 0 1 2 3 4 5 6 7 au 2. Accrual accounting rate of return = Increase in expected average annual operating income Net initial investment