Question
Fantastic Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Fantastic has accumulated regarding the new
Fantastic Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Fantastic has accumulated regarding the new machine is:
Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table
Requirements:
A. The net present value
B. Payback period (round your answer to two decimal places)
C. Discounted payback period
D. Internal rate of return (round the rate to two decimal places)
E. Accrual accounting rate of return based on net initial investment( round interim calculations to the nearest whole dollar. Round the rate to two decimal places)
DATE TABLE | |||
Cost of the machine $110,000 | |||
Increased contribution margin $25,000 | |||
Life of the machine | $8 years | ||
Required rate of return $12% |
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Question content area bottom
Part 1
Requirement 1. Calculate the following for the new machine:
a. Net present value (NPV) (Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.)
The net present value is |
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