PART 7 Capital Decision Making Big Al gives his worker's a one hour lunch and two fifteen minute breaks each day. He believes that a cold soda machine would be appreciated by his workers, and an appreciated worker is a good worker. He has priced a machine at a national member only warehouse for $2,200. The machine should be usable for 3 years, after which it would be inefficient, obsolete and would have to be disposed of at the dump. Big Al believes that 12 cans a day will be purchased. The plant is open five days a week, 50 weeks per year. A case of soda (24 cans) costs $5.52 and Big Al believes that a price of $.95 per can would win him good will. What is the estimated annual sales in cans of soda? What is the contribution margin per can of soda? (rounded to two places, $#.###) {17.01} {17.02} How many cans of soda must be sold each year to breakeven? (Round up to zero places, ########## cans) Annual incremental cash inflows from the soda machine? (rounded to two places, $#.##) What is the payback period in years? (rounded to two places, #.## years) {17.03) {17.04} {17.05} If the time value of money is 12% per year what is the net present value? Use the tables on page 18. {17.06} What is the internal rate of return. Pick the closest interest rate from the tables on page 18. {17.07}