Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Hello there, can anyone help me please with this question, please? Cousin's Salted Snack Company is considering two possible investments: a delivery truck or a
Hello there, can anyone help me please with this question, please?
Cousin's Salted Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $51, 940.35 and could be used to deliver an additional 49,000 bags of taquitos chips per year. Each bag of chips can be sold for a contribution margin of $0.58. The delivery truck operating expenses, excluding depreciation, are $0.79 per mile for 17,000 miles per year. The bagging machine would replace an old bagging machine, and its net investment cost would be $35, 662.50. The new machine would require three fewer hours of direct labor per day. Direct labor is $15 per hour. There are 250 operating days in the year. Both the truck and the bagging machine are estimated to have four-year lives. The minimum rate of return is 9%. However, Cousin's has funds to invest in only one of the projects. a. Compute the internal rate of return for each investment. Use the above table of present value of an annuity of $1. Enter the present value factor to three decimal places. b. Which of the following should be included in a memo to management regarding the recommendation about the two projects? The delivery truck fails to exceed the minimum rate of return requirementStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started