Capital Decision Making: Part 7 - "I see the light" Cybertext

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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 $1,950. 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 7 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 $.60 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 soda? (rounded to two places, $#.## {17.02) How many cans of soda must be sold each year to breakeven? (Round up to zero places, ####,#### cans) {17.03) Annual incremental cash inflows from the soda machine? (rounded to two places, $#.##) {17.04) What is the payback period in years? (rounded to two places, #.## years) {17.05) If the time value of money is 12% per year what is the net present value? Use the tables on page 18. {17.06) What is the internal rate of return. Pick the closest interest rate from the tables on page 18. {17.07)