Corn Doggy, Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle,
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Question:
Corn Doggy, Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $179,000. In addition, Austin estimates that the new machine will increase the companys annual net cash inflows by $22,000. The machine will have a 12-year useful life and no salvage value.
Calculate the machines annual rate of return. (Hint: You will need to calculate Net Income from the Net Annual Cash Flow amount that is given in the problem).
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