Big Al gives his worker's a one hour lunch and two fifteen minute breaks each day. He believes that a

cold soda machine would be appreciated by his workers, and an appreciated worker is a good worker.

He has priced a machine at a national member only warehouse for $2,050. The machine should be

usable for 6 years, after which it would be inefficient, obsolete and would have to be disposed of at the

dump. Big Al believes that 8 cans a day will be purchased. The plant is open five days a week, 50

weeks per year. A case of soda (24 cans) costs $5.76 and Big Al believes that a price of $.65 per

can would win him good will.

Givens: Estimated annual can sales: 2,000 cans; CM per can: 0.41; Annual incremental cash flows from soda machine: 820; Payback period in years: 2.5 years; Internar Rate of Return: 32.5%

- How many cans of soda must be sold in order to break even?

- If the time value of money is 12% per year what is the net present value?

Present Value of Annuity $1.00 in Arrears
	6	Periods
Interest	Periods					Interest		Periods
Rate	3	4	5	6		Rate	3	4	5	6
2.0%	2.884	3.808	4.713	5.601		50.5%	1.399	1.594	1.724	1.810
2.5%	2.856	3.762	4.646	5.508		51.0%	1.391	1.584	1.711	1.795
3.0%	2.829	3.717	4.580	5.417		51.5%	1.383	1.573	1.698	1.781
3.5%	2.802	3.673	4.515	5.329		52.0%	1.375	1.563	1.686	1.767
4.0%	2.775	3.630	4.452	5.242		52.5%	1.368	1.553	1.674	1.753
4.5%	2.749	3.588	4.390	5.158		53.0%	1.360	1.542	1.662	1.740
5.0%	2.723	3.546	4.329	5.076		53.5%	1.352	1.532	1.650	1.726
5.5%	2.698	3.505	4.270	4.996		54.0%	1.345	1.523	1.638	1.713
6.0%	2.673	3.465	4.212	4.917		54.5%	1.337	1.513	1.626	1.700
6.5%	2.648	3.426	4.156	4.841		55.0%	1.330	1.503	1.615	1.687
7.0%	2.624	3.387	4.100	4.767		55.5%	1.323	1.494	1.604	1.674
7.5%	2.601	3.349	4.046	4.694		56.0%	1.315	1.484	1.592	1.662
8.0%	2.577	3.312	3.993	4.623		56.5%	1.308	1.475	1.581	1.649
8.5%	2.554	3.276	3.941	4.554		57.0%	1.301	1.466	1.570	1.637
9.0%	2.531	3.240	3.890	4.486		57.5%	1.294	1.457	1.560	1.625
9.5%	2.509	3.204	3.840	4.420		58.0%	1.287	1.447	1.549	1.613
10.0%	2.487	3.170	3.791	4.355		58.5%	1.280	1.439	1.539	1.602
10.5%	2.465	3.136	3.743	4.292		59.0%	1.273	1.430	1.528	1.590
11.0%	2.444	3.102	3.696	4.231		59.5%	1.266	1.421	1.518	1.579
11.5%	2.423	3.070	3.650	4.170		60.0%	1.260	1.412	1.508	1.567
12.0%	2.402	3.037	3.605	4.111		60.5%	1.253	1.404	1.498	1.556
12.5%	2.381	3.006	3.561	4.054		61.0%	1.247	1.395	1.488	1.545
13.0%	2.361	2.974	3.517	3.998		61.5%	1.240	1.387	1.478	1.534
13.5%	2.341	2.944	3.475	3.943		62.0%	1.234	1.379	1.468	1.524
14.0%	2.322	2.914	3.433	3.889		62.5%	1.227	1.371	1.459	1.513
14.5%	2.302	2.884	3.392	3.836		63.0%	1.221	1.362	1.449	1.503
15.0%	2.283	2.855	3.352	3.784		63.5%	1.214	1.354	1.440	1.492
15.5%	2.264	2.826	3.313	3.734		64.0%	1.208	1.347	1.431	1.482
16.0%	2.246	2.798	3.274	3.685		64.5%	1.202	1.339	1.422	1.472
16.5%	2.228	2.770	3.236	3.636		65.0%	1.196	1.331	1.413	1.462
17.0%	2.210	2.743	3.199	3.589		65.5%	1.190	1.323	1.404	1.452
17.5%	2.192	2.716	3.163	3.543		66.0%	1.184	1.316	1.395	1.443
18.0%	2.174	2.690	3.127	3.498		66.5%	1.178	1.308	1.386	1.433
18.5%	2.157	2.664	3.092	3.453		67.0%	1.172	1.301	1.378	1.424
19.0%	2.140	2.639	3.058	3.410		67.5%	1.166	1.293	1.369	1.414
19.5%	2.123	2.613	3.024	3.367		68.0%	1.160	1.286	1.361	1.405
20.0%	2.106	2.589	2.991	3.326		68.5%	1.155	1.279	1.352	1.396
20.5%	2.090	2.564	2.958	3.285		69.0%	1.149	1.272	1.344	1.387
21.0%	2.074	2.540	2.926	3.245		69.5%	1.143	1.265	1.336	1.378
21.5%	2.058	2.517	2.895	3.205		70.0%	1.138	1.258	1.328	1.369
22.0%	2.042	2.494	2.864	3.167		70.5%	1.132	1.251	1.320	1.361
22.5%	2.027	2.471	2.833	3.129		71.0%	1.127	1.244	1.312	1.352
23.0%	2.011	2.448	2.803	3.092		71.5%	1.121	1.237	1.304	1.344
23.5%	1.996	2.426	2.774	3.056		72.0%	1.116	1.230	1.297	1.335
24.0%	1.981	2.404	2.745	3.020		72.5%	1.111	1.224	1.289	1.327
24.5%	1.967	2.383	2.717	2.986		73.0%	1.105	1.217	1.281	1.319
25.0%	1.952	2.362	2.689	2.951		73.5%	1.100	1.210	1.274	1.311
25.5%	1.938	2.341	2.662	2.918		74.0%	1.095	1.204	1.267	1.303
26.0%	1.923	2.320	2.635	2.885		74.5%	1.090	1.198	1.259	1.295
26.5%	1.909	2.300	2.609	2.853		75.0%	1.085	1.191	1.252	1.287
27.0%	1.896	2.280	2.583	2.821		75.5%	1.079	1.185	1.245	1.279
27.5%	1.882	2.260	2.557	2.790		76.0%	1.074	1.179	1.238	1.272
28.0%	1.868	2.241	2.532	2.759		76.5%	1.069	1.172	1.231	1.264
28.5%	1.855	2.222	2.507	2.729		77.0%	1.064	1.166	1.224	1.256
29.0%	1.842	2.203	2.483	2.700		77.5%	1.060	1.160	1.217	1.249
29.5%	1.829	2.185	2.459	2.671		78.0%	1.055	1.154	1.210	1.242
30.0%	1.816	2.166	2.436	2.643		78.5%	1.050	1.148	1.204	1.235
30.5%	1.803	2.148	2.412	2.615		79.0%	1.045	1.143	1.197	1.227
31.0%	1.791	2.130	2.390	2.588		79.5%	1.040	1.137	1.190	1.220
31.5%	1.779	2.113	2.367	2.561		80.0%	1.036	1.131	1.184	1.213
32.0%	1.766	2.096	2.345	2.534		80.5%	1.031	1.125	1.177	1.206
32.5%	1.754	2.079	2.324	2.508		81.0%	1.026	1.120	1.171	1.199
33.0%	1.742	2.062	2.302	2.483		81.5%	1.022	1.114	1.165	1.193
33.5%	1.730	2.045	2.281	2.458		82.0%	1.017	1.108	1.158	1.186
34.0%	1.719	2.029	2.260	2.433		82.5%	1.013	1.103	1.152	1.179
34.5%	1.707	2.013	2.240	2.409		83.0%	1.008	1.097	1.146	1.173
35.0%	1.696	1.997	2.220	2.385		83.5%	1.004	1.092	1.140	1.166
35.5%	1.685	1.981	2.200	2.362		84.0%	0.999	1.087	1.134	1.160
36.0%	1.673	1.966	2.181	2.339		84.5%	0.995	1.081	1.128	1.153
36.5%	1.662	1.951	2.162	2.316		85.0%	0.991	1.076	1.122	1.147
37.0%	1.652	1.935	2.143	2.294		85.5%	0.986	1.071	1.116	1.141
37.5%	1.641	1.921	2.124	2.272		86.0%	0.982	1.066	1.111	1.135
38.0%	1.630	1.906	2.106	2.251		86.5%	0.978	1.061	1.105	1.129
38.5%	1.620	1.892	2.088	2.229		87.0%	0.974	1.055	1.099	1.123
39.0%	1.609	1.877	2.070	2.209		87.5%	0.969	1.050	1.094	1.117
39.5%	1.599	1.863	2.052	2.188		88.0%	0.965	1.045	1.088	1.111
40.0%	1.589	1.849	2.035	2.168		88.5%	0.961	1.040	1.082	1.105
40.5%	1.579	1.836	2.018	2.148		89.0%	0.957	1.036	1.077	1.099
41.0%	1.569	1.822	2.001	2.129		89.5%	0.953	1.031	1.072	1.093
41.5%	1.559	1.809	1.985	2.109		90.0%	0.949	1.026	1.066	1.087
42.0%	1.549	1.795	1.969	2.091		90.5%	0.945	1.021	1.061	1.082
42.5%	1.540	1.782	1.953	2.072		91.0%	0.941	1.016	1.056	1.076
43.0%	1.530	1.769	1.937	2.054		91.5%	0.937	1.012	1.050	1.071
43.5%	1.521	1.757	1.921	2.036		92.0%	0.933	1.007	1.045	1.065
44.0%	1.512	1.744	1.906	2.018		92.5%	0.930	1.002	1.040	1.060
44.5%	1.502	1.732	1.890	2.000		93.0%	0.926	0.998	1.035	1.054
45.0%	1.493	1.720	1.876	1.983		93.5%	0.922	0.993	1.030	1.049
45.5%	1.484	1.707	1.861	1.966		94.0%	0.918	0.989	1.025	1.044
46.0%	1.475	1.695	1.846	1.949		94.5%	0.914	0.984	1.020	1.039
46.5%	1.467	1.684	1.832	1.933		95.0%	0.911	0.980	1.015	1.033
47.0%	1.458	1.672	1.818	1.917		95.5%	0.907	0.975	1.010	1.028
47.5%	1.449	1.660	1.804	1.901		96.0%	0.903	0.971	1.006	1.023
48.0%	1.441	1.649	1.790	1.885		96.5%	0.900	0.967	1.001	1.018
48.5%	1.432	1.638	1.776	1.870		97.0%	0.896	0.962	0.996	1.013
49.0%	1.424	1.627	1.763	1.854		97.5%	0.893	0.958	0.992	1.008
49.5%	1.416	1.616	1.750	1.839		98.0%	0.889	0.954	0.987	1.003
50.0%	1.407	1.605	1.737	1.824		98.5%	0.885	0.950	0.982	0.999
						99.0%	0.882	0.946	0.978	0.994
						99.5%	0.878	0.942	0.973	0.989
						100.0%	0.875	0.938	0.969	0.984