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:

Cost of the machine $125,000

Increased contribution margin

$22,000

Life of the machine

9 years

Required rate of return

10%

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 will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts.

d.	Internal rate of return (using the interpolation method)
e.	Accrual accounting rate of return based on net initial investment (assume straight-line depreciation)
2.	What other factors should HeavenlyHeavenly Candy consider in deciding whether to purchase the new machine?