I need help with questions 7 & 8. Please i am very confused.

6. What is the internal rate of return for the mixer? 7. Determine the net present value of the continuous oven 8. Determine the net present value of the semiautomated packing unit 9. Which capital projects should Mike undertake this year? EXHIBIT 1 Clear Lake Bakery Balance Sheet as of Dec. 31 $1,000,000 5,143,000 500,000 2000,000 8,640,210 $17,283210 Current liabilities Mortgage bond Common stock (500,000 shares outstanding Contributed capital in excess of par Retained earnings Total liabilities & common equity EXHIBIT 2 Depreciation Rates for MACRS Property Year 3-Year 7-Year 14.29% 33.33% 1 2 44.45 24.49 14.81 3 17.49 4 741 12.49 5 8,93 6 8.92 8.93 7 8 4.46 Baking Oven Mike is also evaluating a continuous baking oven. The new oven would cost $685,000, which includes the cost of the equipment, shipping, and installation The installation costs include some minor changes in the current production layout to accommodate the most efficient use of the continuous oven. Clear Lake Bakery currently uses six large upright ovens that are loaded from the front end with two large roll-in racks that contain twenty cookie trays each A continuous oven would allow the cookie trays to be placed directly on a roller belt that feeds directly to the oven. The oven would replace the six roll in ovens that are currently being used. Although there would be no increase in capacity, Mike has calculated that the new oven would result in a savings in operating expenses of $105,000 per year. The oven would be depreciated on a seven-year MACRS schedule to a value of zero, although Mike believes he can sell the oven for $30,000 in 10 years. He also expects that these expenses would have increased at least 5 percent per year over the ten-year economic life of the oven Semiautomated Packing Unit The final project that Mike is considering is a semiautomated packing unit that would cost $390,000 including installation. The new packing unit would be depreciated on a seven-year MACRS schedule. The economic life of the packer is ten years, at which time the unit would have no market value. Currently Clear Lake Bakery has a wrapping machine which was purchased four years ago for $90,000 and was being depreciated on a seven-year MACRS schedule. The wrap per has a current market value of $20,000. The packing unit will result in a sav ings in operating expenses of $90,000 per year. These expenses are expected to increase 5 percent per year over the ten-year economic life of the unit 6. What is the internal rate of return for the mixer? 7. Determine the net present value of the continuous oven 8. Determine the net present value of the semiautomated packing unit 9. Which capital projects should Mike undertake this year? EXHIBIT 1 Clear Lake Bakery Balance Sheet as of Dec. 31 $1,000,000 5,143,000 500,000 2000,000 8,640,210 $17,283210 Current liabilities Mortgage bond Common stock (500,000 shares outstanding Contributed capital in excess of par Retained earnings Total liabilities & common equity EXHIBIT 2 Depreciation Rates for MACRS Property Year 3-Year 7-Year 14.29% 33.33% 1 2 44.45 24.49 14.81 3 17.49 4 741 12.49 5 8,93 6 8.92 8.93 7 8 4.46 Baking Oven Mike is also evaluating a continuous baking oven. The new oven would cost $685,000, which includes the cost of the equipment, shipping, and installation The installation costs include some minor changes in the current production layout to accommodate the most efficient use of the continuous oven. Clear Lake Bakery currently uses six large upright ovens that are loaded from the front end with two large roll-in racks that contain twenty cookie trays each A continuous oven would allow the cookie trays to be placed directly on a roller belt that feeds directly to the oven. The oven would replace the six roll in ovens that are currently being used. Although there would be no increase in capacity, Mike has calculated that the new oven would result in a savings in operating expenses of $105,000 per year. The oven would be depreciated on a seven-year MACRS schedule to a value of zero, although Mike believes he can sell the oven for $30,000 in 10 years. He also expects that these expenses would have increased at least 5 percent per year over the ten-year economic life of the oven Semiautomated Packing Unit The final project that Mike is considering is a semiautomated packing unit that would cost $390,000 including installation. The new packing unit would be depreciated on a seven-year MACRS schedule. The economic life of the packer is ten years, at which time the unit would have no market value. Currently Clear Lake Bakery has a wrapping machine which was purchased four years ago for $90,000 and was being depreciated on a seven-year MACRS schedule. The wrap per has a current market value of $20,000. The packing unit will result in a sav ings in operating expenses of $90,000 per year. These expenses are expected to increase 5 percent per year over the ten-year economic life of the unit