Capital Decision Making 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 $2,000. 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 6 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 AI believes that a price of $.85 per can would win him good will What is the estimated annual sales in cans of soda? (17.01) What is the contribution margin per can of soda2 (rounded to two places. S#.## (17.02) How many cans of soda must be sold each year to breakeven? (Round up to zero places, ### ### cans) (17.03) B 9 D Annual incremental cash inflows from the soda machine?(rounded to two places. S#. (17.04) What is the payback period in years? (rounded to two places #.## years) 8 9 0 1 2 -9 0 11 12 3 00 01 02 03 04 05 06 07 (17.05) if the time value of money is 12% per year what is the net present value? Use the tables on page 18 What is the internal rate of return. Pick the closest interest rate from the tables on page 18. {17.07) D Present Value of Annuity $1.00 in Arrears K. 1 2 3 Interest Periods Interest Periods 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 30 37 Rate 3 4 20% 2.884 3.808 2.5% 2.856 3.762 3.0% 2.829 3.717 3.5% 2 802 3.673 4.0% 2.775 3.630 4.5% 2.749 3.588 5.0% 2.723 3.546 5.5% 2.698 3.505 -6.0% 2.673 3.465 6.5% 2.648 3.426 70% 2.624 3.387 7.5% 2.601 3.349 8.0% 2577 3.312 8.5% 2.554 3276 9.0% 2531 3.240 9.5% 2.509 3 204 10.0% 2487 3.170 10.5% 2.465 3.136 11.0% 2.444 3.102 11.5% 2.423 3.070 120% 2 402 3,037 12.5% 2.381 3.006 13.0% 2 361 2.974 13.5% 2.341 2944 14.0% 2.322 2.914 14.5% 2.302 2884 15.0% 2283 2.855 15.5% 2 264 2 828 16.0% 2 246 2 798 16.5% 2228 2770 17.0% 2.210 2743 17.5% 2.192 2.716 18.0% 2174 2690 212 AAA 3 4 5 6 5 6 4.713 5.601 4.646 5508 4.580 5.417 4.515 5.329 4.452 5.242 4.390 5.158 4.329 5.076 4.270 4.996 4.212 4.917 4.156 4.841 4.100 4.767 4.046 4.694 3.993 4.623 3.941 4.554 3.890 4.486 3.840 4,420 3.791 4.355 3.743 4.292 3.696 4.231 3.650 4 170 3.605 4.111 3.561 4054 3.517 3.998 3.475 3.943 3.433 3889 3392 3 836 3352 3.784 3313 3.734 3274 3.685 3.236 3.636 3.199 3.589 3.163 3543 3.127 3.498 2002 12 7 8 9 Rate 3 50.5% 1.399 51.0% 1.391 51.5% 1.383 520% 1.375 52.5% 1.369 53.0% 1.360 53.5% 1.352 54.0% 1.345 54.5% 1.337 55.0% 1330 55 5% 1.323 56.0% 1 315 56.5% 1.308 57,0% 1.301 57 5% 1 294 58.0% 1.287 58 5% 1.280 59 0% 1273 59,5% 1266 60.0% 1.260 60.5% 1.253 61.0% 1 247 61.5% 1.240 620% 1234 625% 1 227 630% 1221 63.5% 1214 04.0% 1 208 64.5% 1 202 65.0% 1.196 65,5% 1190 86.0% 1 184 88.5% 1 178 820 1473 12 13 4 5 6 1.594 1.724 1.810 1.584 1.711 1.795 1.573 1.698 1.781 1.563 1.686 1.767 1.553 1.674 1.753 1.542 1.662 1740 1.532 1.650 1.726 1.523 1.638 1.713 1.513 1.626 1,700 1.503 1.615 1.687 1.494 1.604 1.674 1.484 1.592 1.662 1.475 1 581 1.649 1.466 1.570 1.637 1.457 1.560 1.625 1.447 1549 1.613 1439 1.539 1.602 1.430 1.528 1.590 1421 1.518 1.579 1.412 1.508 1.567 1.404 1.498 1.556 1.395 1.488 1545 1 387 1478 1.534 1.379 1.468 1524 1371 1.459 1513 1382 1.449 1503 1.354 1.440 1.492 1.347 1431 1482 1 339 1422 1472 1.331 1413 1.402 1.323 1.404 1452 1 316 1.395 1.443 1.308 1386 1.433 1.101 1270 1424 15 16 17 18 Present Value Ta 10 11 14 ** A1 X7 fx F M B C 38 18.5% 2.157 2664 39 19.0% 2 140 2639 40 19.5% 2.123 2613 41 20.0% 2.106 2.589 42 20.5% 2090 2.564 43 21.0% 2074 2.540 44 21.5% 2058 2.517 45 22.0% 2.042 2.494 46 22.5% 2027 2471 47 23.0% 2011 2.448 48 23.5% 1.996 2.426 49 24.0% 1.981 2.404 50 24.5% 1.987 2.383 51 25.0% 1.952 2.362 52 25.5% 1.938 2341 53 26.0% 1.923 2.320 54 26.5% 1.909 2.300 55 270% 1.896 2.280 56 27.5% 1.882 2260 57 28 0% 1.868 2241 58 28.5% 1.855 2.222 59 29.0% 1.842 2 203 60 29.5% 1.829 2.185 61 30.0% 1816 2 166 62 30.5% 1803 2.148 63 31.0% 1.791 2.130 64 31.5% 1.779 2113 65 32.0% 1.766 2.096 66 32.5% 1.754 2079 67 33,0% 1.742 2062 68 33.5% 1.730 2045 69 34.0% 1.719 2.029 70 34.5% 1.707 2013 71 35.0% 1.696 1.997 72 35.5% 1,685 1.981 73 36.0% 1.673 1.966 74 36.5% 1.662 1951 75 370% 1.652 1935 D 3.092 3.058 3.024 2.991 2.958 2.926 2895 2864 2.833 2803 2774 2.745 2.717 2.689 2.662 2635 2.609 2.583 2.557 2.532 2.507 2.483 2459 2.436 2.412 2390 2.367 2345 2.324 2 302 2281 2.260 2 240 2 220 2 200 2181 2.162 2.143 E 3.453 3.410 3.367 3.326 3.285 3 245 3205 3.167 3.129 3.092 3,056 3.020 2986 2.951 2.918 2.885 2 853 2.821 2.790 2.759 2.729 2.700 2671 2.643 2.615 2.588 2.561 2.534 2.508 2.483 2.458 2.433 2.409 2.385 2.362 2.339 2316 2 294 G 67.0% 67.5% 68.0% 68,5% 69.0% 69.5% 70.0% 70.5% 71.0% 71.5% 72.0% 72.5% 73.0% 73.5% 74,0% 74.5% 75.0% 75.5% 760% 76.5% 77.0% 77.5% 78.0% 78.5% 79.0% 79.5% 80.0% 80.5% 81.0% 815% 82.0% 82.5% 83.0% 83.5% 84.0% 84.5% 85 0% 85,5% H 1 172 1.166 1. 160 1.155 1.149 1.143 1.138 1.132 1.127 1.121 1.116 1.111 1.105 1.100 1.095 1.090 1 085 1.079 1.074 1 069 1.064 1.060 1.055 1.050 1.045 1040 1.036 1.031 1.028 1.022 1.017 1.013 1.008 1.004 0999 0.995 0991 0.986 1 1.301 1.293 1.286 1.279 1.272 1.285 1258 1.251 1.244 1.237 1.230 1.224 1217 1210 1.204 1.198 1.191 1.185 1.179 1.172 1.166 1 160 1 154 1.148 1 143 1.137 1 131 1.125 1120 1.114 1.108 1 103 1.097 1.092 1087 1.081 1078 1071 J 1.378 1.369 1.361 1352 1.344 1336 1328 1320 1.312 1.304 1.297 1.289 1281 1.274 1.267 1.259 1252 1 245 1.238 1 231 1224 1.217 1 210 1 204 1.197 1.190 1.184 1.177 1171 1.165 1.158 1 152 1.146 1.140 1.134 1.128 1 122 1116 1.424 1.414 1.405 1.396 1.387 1.378 1.369 1.361 1352 1344 1.335 1.327 1.319 1.311 1 303 1.295 1 287 1.279 1.272 1264 1.256 1.249 1.242 1.235 1.227 1220 1.213 1.208 1 199 1.193 1.186 1179 1.173 1.186 1 160 1.153 1 147 1.141 C F G M B 37.5% 1.641 38.0% 1.630 38.5% 1.620 39.0% 1.609 39.5% 1.599 40.0% 1.589 40.5% 1.579 5 41.0% 1.569 4 41.5% 1.559 420% 1.549 8 425% 1.540 7 430% 1.530 8 43.5% 1.521 -9 44.0% 1.512 30 44.5% 1.502 91 45.0% 1.493 32 45.5% 1.484 33 46.0% 1.475 94 46.5% 1467 95 47 0% 1458 96 47 5% 1.449 97 48.0% 1.441 98 48.5% 1.432 99 49.0% 1.424 100 49.5% 1.418 101 50.0% 1.407 102 103 104 105 108 107 108 M 1.921 1.906 1.892 1.877 1.863 1.849 1.836 1.822 1.809 1.795 1.782 1.769 1.757 1.744 1.732 1.720 1.707 1.695 1.684 1.672 1.660 1.649 1.638 1.627 1.616 1.605 D 2.124 2.106 2.088 2070 2.052 2035 2.018 2.001 1.985 1.969 1.953 1.937 1.921 1.906 1.890 1.876 1.861 1.846 1.832 1.818 1 804 1.790 1.776 1783 1.750 1.737 E 2.272 2251 2.229 2.209 2.188 2.168 2.148 2.129 2.109 2.091 2.072 2.054 2.036 2.018 2.000 1.983 1.966 1.949 1.933 1917 1.901 1.885 1.870 1.854 1.839 1.824 860% 86.5% 87.0% 87.5% 88.0% 88.5% 89.0% 895% 90.0% 90.5% 91 0% 91.5% 92.0% 92.5% 93 0% 93.5% 94.0% 94.5% 95.0% 95,5% 96 0% 96.5% 97.0% 97,5% 98.0% 98.5% 99.0% 99.5% 100.0% H 0.982 0.978 0.974 0.969 0.965 0.961 0.957 0.953 0.949 0.945 0.941 0.937 0.933 0.930 0.926 0.922 0.918 0.914 0.911 0.907 0.903 0.900 0.896 9893 0.889 0.885 0.882 0.878 0.8 K 1.066 1.111 1.135 1,061 1.105 1.129 1.055 1.099 1.123 1.050 1,094 1.117 1.045 1088 1.111 1.040 1,082 1.105 1036 1.077 1.099 1.031 1072 1.093 1026 1.066 1,087 1,021 1 061 1 082 1.016 1.056 1.076 1.012 1.050 1.071 1.007 1.045 1.065 1.002 1.040 1.060 0.998 1.035 1054 0.993 1.030 1.049 0.989 1.025 1.044 0.984 1.020 1.039 0.980 1.015 1.033 0.975 1.010 1028 0.971 1.006 1023 0.967 1.001 1.018 0.962 0.996 1.013 0.958 0.992 1 008 0.954 0.987 1.003 0.950 0.982 0.999 0.946 0.978 0.994 0.942 0.973 0989 0.938 0.969 0.984 If off the chart use 100%