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Heavenly Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Heavenly has accumulated regarding the new
Heavenly Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Heavenly has accumulated regarding the new machine is: EEB (Click the icon to view the information.) Present Value of $1table Present Value of Annuity of S1 table Future Value of $1 table Future Value of Annuity of S1 table Data Table Read the reqirements- 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 p The net present value is $ b. Payback period (Round your answer to two decimal places.) Cost of the machine Increased contribution margin Life of the machine Required rate of return $90,000 $22,000 9years 8% Heavenly 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 wil offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts The payback period is years c. Discounted payback period (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, XXX% The discounted payback period is d. Internal rate of retum (Round the rate to two decimal places, X.XX%.) The internal rate of return (IRR) is 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. XXX% The accrual accounting rate of return (AARR) is Requirement 2. What other factors should Heavenly consider in deciding whether to purchase the new machine? (Select all that apply.) years. Print Done % based on net initial investment. A. B. C. D. Issues related to the financing of the project, and the availability of capital to pay for the system The costs of training and other "hidden. start-up costs are included in the estimated $90,000 cost of the new machine. The effect of the system on employee morale. The benefits of the new system for customers
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