$($Click the icon to view the information.$)$

Read the requirements.

Requirement $1.$ Calculate the following for the new machine:

The net present value is

Data table

Cost of the machine

Increased annual contribution margin

Life of the machine

$9$ years

Required rate of return

$4\%$

Magnificent estimates it will be able to produce more candy using the second

machine and thus increase its annual contribution margin. It also estimates 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.

Requirements

Calculate the following for the new machine:

a$.$ Net present value

b$.$ Payback period

c$.$ Discounted payback period

d$.$ Internal rate of return $($using the interpolation method$)$

e$.$ Accrual accounting rate of return based on the net initial

investment $($assume straight$-$line depreciation$)$

What other factors should Magnificent Candy consider in deciding whether to

purchase the new machine?