Monty Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $104,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $11,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $99,000. Martson Molders currently sells a molding machine that will allow Monty Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $139,000 and would cost $13,000 per year to operate. Monty Pix's current machine costs only $8,000 per year to operate. If Monty Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Monty Pix uses straight-line depreciation. Click here to view the factor table. (a) Your Answer Correct Answer (Used) Calculate the new machine's net present value assuming a 16% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal place, e.g. 58,971.) Net present value $ 11,939 (b) Use Excel or a similar spreadsheet application to calculate the new machine's internal rate of return. (Round answer to 2 decimal places, e.g. 1.25%.) Internal rate of return eTextbook and Media Save for Later % Attempts: 0 of 3 used Submit Answer (c) Calculate the new machine's payback period. (Round answer to 2 decimal places, e.g. 1.25.) Payback period years eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer APPENDIX 9.1 Present value of $1 received in n periods. Periods 4% 5% 6% 7% 8% 9% 11% 12% 1 0.9615 2 345 0.9524 0.9434 0.9346 0.9246 0.9070 0.8900 0.8734 0.8890 0.8638 0.8396 0.8163 0.8548 0.8227 0.7921 0.7629 0.9259 0.8573 0.7938 0.8219 0.7835 0.7473 0.7130 0.7350 0.6806 10% 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7432 0.7182 0.6944 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6407 0.6086 0.5787 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5523 0.5158 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4761 0.4371 13% 14% 16% 18% 20% 0.4823 0.4019 19 6 0.7903 0.7462 0.7050 7 0.7599 0.7107 0.6651 8 9 0.7307 0.7026 10 0.6663 0.6227 0.6768 0.6274 0.5820 0.6446 0.5919 0.5439 0.6756 0.6139 0.5584 0.5083 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4104 0.3704 0.3349 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3538 0.3139 0.2791 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3050 0.2660 0.2326 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2630 0.2255 0.1938 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2267 0.1911 0.1615 11 12 13 14 15 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.2607 0.2366 0.1954 0.1619 0.2307 0.2076 0.1685 0.1372 0.1122 0.2042 0.1821 0.1452 0.1163 0.0935 0.1807 0.1597 0.1252 0.0985 0.0779 0.1599 0.1401 0.1079 0.0835 0.0649 0.1346 16 17 18 0.5339 0.4581 0.3936 0.3387 0.5134 0.4363 0.3714 0.3166 0.4936 0.4155 0.3503 0.2959 19 0.4746 0.3957 0.3305 0.2765 0.2919 0.2703 0.2502 0.2317 20 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.0930 0.0708 0.0541 0.2311 0.1978 0.1696 0.1456 0.1252 0.1078 0.0802 0.0600 0.0451 0.2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0691 0.0508 0.0376 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0596 0.0431 0.0313 0.1486 0.1240 0.1037 0.0868 0.0728 0.0514 0.0365 0.0261 $1 PVn, i = (1 + i)" APPENDIX 9.2 Present value of an annuity of $1 per period. Periods 4% 5% 6% 7% 9% 10% 11% 12% 1 0.9615 10 2345 67829 1.8861 0.9434 1.8334 2.7751 2.7232 2.6730 3.6299 3.5460 3.4651 4.4518 4.3295 4.2124 0.9524 1.8594 8% 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8621 0.8475 0.8333 1.8080 1.7833 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6052 1.5656 1.5278 2.6243 2.5771 2.5313 2.4868 2.4437 2.4018 2.3612 2.3216 2.2459 2.1743 2.1065 3.3872 3.3121 3.2397 3.1698 3.1024 3.0373 2.9745 2.9137 2.7982 2.6901 2.5887 4.1002 3.9927 3.8897 3.7907 3.6959 3.6048 3.5172 3.4331 3.2743 3.1272 2.9906 13% 14% 16% 18% 20% 5.2421 5.0757 4.9173 4.7665 4.6229 6.0021 5.7864 5.5824 5.3893 5.2064 6.7327 6.4632 6.2098 5.9713 5.7466 7.4353 7.1078 6.8017 6.5152 6.2469 8.1109 7.7217 7.3601 7.0236 6.7101 4.4859 5.0330 5.5348 5.9952 6.4177 4.3553 4.2305 4.1114 3.9975 3.8887 3.6847 3.4976 3.3255 4.8684 4.7122 4.5638 4.4226 4.2883 4.0386 3.8115 3.6046 5.3349 5.1461 4.9676 4.7988 4.6389 4.3436 4.0776 3.8372 5.7590 5.5370 5.3282 5.1317 4.9464 4.6065 4.3030 4.0310 6.1446 5.8892 5.6502 5.4262 5.2161 4.8332 4.4941 4.1925 11 8.7605 12 9.3851 13 9.9856 14 10.5631 15 11.1184 8.3064 7.8869 7.4987 7.1390 6.8052 8.8633 8.3838 7.9427 7.5361 7.1607 9.3936 8.8527 8.3577 7.9038 7.4869 9.8986 9.2950 8.7455 8.2442 7.7862 10.3797 9.7122 9.1079 8.5595 8.0607 6.4951 6.2065 6.8137 6.4924 7.1034 6.7499 7.3667 6.9819 7.6061 7.1909 5.9377 5.6869 5.4527 5.0286 4.6560 6.1944 5.9176 5.6603 5.1971 4.7932 4.4392 6.4235 6.1218 5.8424 5.3423 4.9095 4.5327 6.6282 6.3025 6.0021 5.4675 5.0081 4.6106 6.8109 6.4624 4.3271 6.1422 5.5755 5.0916 4.6755 175 16 18 19 20 11.6523 10.8378 10.1059 9.4466 8.8514 12.1657 11.2741 10.4773 9.7632 9.1216 12.6593 11.6896 10.8276 10.0591 9.3719 13.1339 12.0853 11.1581 10.3356 9.6036 13.5903 12.4622 11.4699 10.5940 9.8181 8.3126 7.8237 7.3792 6.9740 6.6039 8.5436 8.0216 7.5488 7.1196 6.7291 8.7556 8.2014 7.7016 7.2497 6.8399 8.9501 8.3649 7.8393 7.3658 6.9380 9.1285 8.5136 7.9633 7.4694 7.0248 6.2651 5.6685 5.1624 4.7296 6.3729 5.7487 5.2223 4.7746 6.4674 5.8178 5.2732 4.8122 6.5504 5.8775 5.3162 4.8435 6.6231 5.9288 5.3527 4.8696 1 $1 (1 + i)n PVAn,i