Check my work The management of Kunkel Company is considering the purchase of a $41,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 12%. 5 Click here to view Exhibit 12-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. points Required: 1. Determine the net present value of the investment in the machine 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Book Complete this question by entering your answers in the tabs below. Hint Required 1 Required 2 Print Determine the net present value of the investment in the machine. (Negative amount should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s). Round your final answer to the nearest whole dollar amount.) References Net present value Required 1 Required 2 > Mc Graw Check my work 2 Wendell's Donut Shoppe is investigating the purchase of a new $52,100 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,100 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,800 dozen more donuts each year. The company 5 realizes a contribution margin of $1.70 per dozen donuts sold. The new machine would have a six-year useful life. points Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? Book 2. What discount factor should be used to compute the new machine's internal rate of return? (Round your answer to 3 decimal places. 3. What is the new machine's internal rate of return? (Round your final answer to the nearest whole percentage.) Hint 4. In addition to the data given previously, assume that the machine will have a $11,500 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage.) Print 1. Annual cash inflows References 2. Discount factor . Internal rate of return % . Internal rate of return % Mc HillCheck my work 3 Perit Industries has $110,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are 6 Project A Project B points Cost of equipment required $110 , 000 $ 0 Working capital investment required $ $110, 000 Annual cash inflows $ 20, 000 $ 68, 000 Salvage value of equipment in six years $ 8,600 Life of the project 6 years 6 years Book The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 16%. Hint Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Print Required: 1. Compute the net present value of Project A. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.) In 2. Compute the net present value of Project B. (Enter negative value with a minus sign. Round your final answer to the nearest References whole dollar amount.) 3. Which investment alternative (if either) would you recommend that the company accept? 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept? Mc Gra 4 Derrick lverson is a divisional manager for Holston Company His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3560.00!) investment in equipment with a useful life of ve years and no salvage value. Holston Company's discount rate is 7 16%. The project would provide net operating income each year for ve years as follows: points 5a 1es 53 , 0091.000 Variable expenses M El Contribution margin 1.753.000 eajck Fixed expenses: Advertising, salaries, and other fixed out-ofpocket costs 3 650,000 a Depreciation 712 800 Hm Total fixed expenses M Net: operating income w r! . P, m Click here to View Exhi t 123-1 and Exhibit 123-2, to determine the appropriate discount factor(s) using tables. FI Required: \"Gimmes 1, Compute the project's net present value. 2. Compute the project's simple rate of return. 3a. Would the company want Derrick to pursue this investment opportunity? 3b. Would Derrick be inclined to pursue this investment opportunity? complete this question by entering your answer: In the tabs below. Req 1 R241 2 Req 3A Req 33 Compute the project's net present value. (Round your nal answer to the nearest whole dollar amount.) Next > M: ( Prev 4 of 7 Check my work 5 Henrie's Drapery Service is investigating the purchase ofa new machine for cleaning and blocking drapes. The machine would cost $151,640, including freight and installation. Henrie's estimated the new machine would increase the company's cash inows, net of expenses, by $40,000 per year. The machine would have a ve-year useful life and no salvage value. 7 points Click here to view Exhibit 1254 and Exhibit 123-2, to determine the appropriate discount factor(sl using table. Required: AI 1. What is the machine's internal rate of return? (Round your final answer to the nearest whole percentage.) 2. Using a discount rate of l0%, what is the machine's net present value? \"Wk 3. Suppose the new machine would increase the company's annual cash inows. net of expenses. by only 336.000 per year. Under these conditions. what is the internal rate of return? (Round your final answer to the nearest whole percentage.) E . Intemal late of return Meme\" 2. Net present value 3. Internal rate of return Next ) M: % ( Prev 5 Di 7 Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one oftwo new producs for a ve- year period. His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 19% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B Initial investment: Cost of equipment (xero salvage value) $190,000 $400,000 Annual revenues and costs: Sales revenues $270,000 $370,000 Variable expenses $128,000 $178,000 Depreciation expense 5 38,000 3 80,000 Fixed outofpocket operating costs 3 72,000 3 52,000 The company's discount rate Is 17%. Click here to view Exhiblt1ZB-1 and Exhibit 123-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each product. 2. Calculate the net present value for each product. 3. Calculate the internal rate of return for each product. 4. Calculate the project profitability index for each product 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred. 6b. Based on the simple rate of return, Lou Barlow would likely: Complete Hull question Irv enlerlng your answer: In the tabs below. neqi m2 Req: Reqll H Reqs Requ ReQGB Calculate the payback period for each product. (Round your answers to 2 decimal places.) ( Prev 7 of 7 Next