Cost of the machine $125,000

Increased contribution margin $20,000

Life of the machine 9years

Required rate of return 6%

Splendid estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate 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 atyear-end except for initial investment amounts.

a. Net Present Value

b. Payback period

c. Discounted payback period

d. Internal Rate of Return

e. Accrual accounting rate of return

could someone please explain, I am totally lost.