Intemal Rate of Retum Hethod-Two Projects Munch N Crunch Snack Company is considering two possible investments: a delivery truck or a bagoing machine. The delivery truck would cost $66,523.56 and could be uied to deliver an additional 49,000 bagi of pre pretzels can be sold for a contribution margin of cost would be $64,788.75. The new machine would require three fewer hours of dieect labor per day. Direct labor is $15 per hour. There are 250 sperating days in the year. Both the trck and the bagping machine are estimated to have sine-year ives per year. Each bag of The delivery truck operating expenses, excluding depredation, are $0.52 per mile for 17,000 iles per year, The bagging macine would replace an oid bagging machine, and its net investment The minimum rate of return is 9%. However, Munch N Crunch has funds to invest in only one of the projects Present Value of an Anaity of $1 at Compound Inteest Year 6% 10% 12% 15% 20% 0.943 0.909 0.93 0.870 0.833 1.833 1.736 1.690 1.626- 1528 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 4212 3.791 3,605 3.352 2.991 4.917 4355 4.111 3.784 3.326 7 5.542 4.960 4.564 4.160 3.605 6210 5335 4.968 4487 3.837 9 6.802 5.759 5.32m 4.772 4.031 .360 6.145 5.050 5.019 4.192 a. Compute the internal rabe of return for each isvestment Use the above table of prnk v of an aty of $1ieed rond oar pretae factor aners to theee decimal plac and ntenal rate of sturn to the nearest parcend Delivery Truck Bagging Machine Present value factor Intemal rate of return. Therefore the recmeendation in temal Rate of Reu Hethod-Two Projects Monch N Crnch Snack Company is considering two posible investments: a delivery trck or a bagging machine The delivery truck would cost s06,523.56 and cod be used to dellive an addtional 4.000 ba of prets per year, Ech bg of pretrels can be sold for a contribution margin of t038. he delivery truk operating expenses, esduding depreciation, are 0.52 per mile for 17,000 miles per year. The bagging mache wd replace an old baging aiand ts net invet cost would be 564,7875 The new machine would require three fewer hours of drect labor per day, Direct labor is $15 per hour. There are 250 sperting days in the year Both the truck and the baoging machine are etiated to have e year ve The minimum rate of return is 9% However, Hunch N Crunch has funds to ivest in only one of the projects Present Value of an Anmulty of $1 at Compoand Interest Year 64% 10% 12% 15% 20% 0.943 0.909 0.893 0870 0.833 1.833 1.736 1.090 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 5.582 4.868 4.564 4.160 3.605 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 requied round your prsent value factor anwers to theee decimal places and ietemal rte of return to the nnarest pecet a. Compute the intemal rate of retum for each investment Use the above table of present value of an anulty of $1, Delivery Truck Bapging Hachine Present value factor Internal rate of return the recommendation lo than the minimm rate of retrm requiremest of % Therne than the minimum rate of retum requirement of 9% while the delvery truck rate of retu was less b. The bagging machine rabe of reburn was greater to invest in the bagging machine