pe Wendell's Donut Shoppe is investigating the purchase of a new $50,100 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,900 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,600 dozen more donuts each year. The company realizes a contribution margin of $1.60 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 138-1 and Exhibit 138-2, to determine the appropriate discount factor(s) using tables. nd Exhibit 13B.2. to damachines00 dozen Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine's internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine's internal rate of return? (Round your final answer to nearest whole percentage.) 4. In addition to the data given previously, assume that the machine will have a $17,225 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach; find the discount rate that will cause the net present value to be closest to zero) (Round your final answer to nearest whole percentage.) 2 1. Annual cash inflows 2. Discount factor 3. Internal rate of return 4. Internal rate of return EXHIBIT 13B-1 8% 20% 22% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 143 624516419 890 0.873 0.857 0.842 0.826 0.812 0.797 769 0.756 0.743 0.731 0.718 694 0.683 0.672 0.661 0.650 0.889 0.864 0.840 0.816 0.794 0.772 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 92 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0 822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 402 0.386 0.370 0 6 7 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.303 0.289 0.275 0.262 4526 384 665 0.623 0.583 0.547 0.513 482 0.452 0.425 0.400 0.376 0.354 0 0.314 0.296 0.279 0.263 0.249 0 8 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0.204 0.191 0.179 0.168 703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 0 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 135 0.123 0.112 0.103 0.094 0.086 625 0.557 0.497 0.444 0.397 0.356 0.3 19 0.286 0.257 0.231 0.208 0.187 0.168 o.152 0.137 0.124 0.112 .102 OD 2 OO83 O,076 0.06 0.601 0.530 0.469 0.4 1 5 0.368 0.326 0.290 0.258 0.229 0204 0.182 O.163 .145 01:0 16 o104 0.093 0034 DDh5 068 O06., 055 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.555 0.481 0.417 0.362 0.3 15 0.275 0.239 0.209 0.183 0.160 0.140 0.123 .IOB OO95 OO84 OO74 0.065 0057 oos, aos oor) 14 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.5 13 0.436 0.371 0.317 0.270 0.231 0.198 O.170 O.146 O.125 0.108 0.093 0.080 0.069 0.060 0.052 0.045 0.039 0.034 0.030 .026 0.023 0.494 0.4 16 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 .095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 O.O28 O.O24 0.021 O.018 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 O 17 18 083 0.070 0.060 0.051 0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.014 20 456 0.377 0.312 0.258 0.21 124 0.104 0.087 0.073 0.06 1 0.051 0.043 0.037 0.031 0.026 0.22 00 0.014 0.012 0.294 0.242 0.199 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.0 0 422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 0.012 0.010 0.009 0.007 24 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 0.010 0.008 0.007 O. 25 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 O.O30 O.O24 0.020 0.016 0.013 0.010 .009 O.OO7 O.006 0.005 0.004 233 197 17150 26 27 28 29 30 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.347 0.268 0.207 0.161 0.125 0.098 0.076 0.060 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.333 0.255 0.196 0.150 0.116 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 308 243 0196 161 40 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 13B-2 Present Value of an Annuity of $1 in Arrears:71 Period 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1.474 1.457 1.440 547 10 540 264 2 2.624 2.577 2.531 2.487 2.444 2.402 4 5 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2.494 2.448 2.404 2.362 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 329 3465 2624 1783 355 4.231 4.111 498 3.410 3.326 3.245 3.167 3.092 3.020 7 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 4.799 4.639 4.487 4.34 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.46 4.659 4.494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 60 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 3.902 3.776 3.656 5.421 5.197 4.988 4.793 4.611 4.439 4.278 4.127 3.985 3.851 3.725 863 8.384 7.943 7.536 7.161 6.814 6.492 6.194 5.9 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.4246122 5.842 5.5835342 5.118 4.9104.715 4533 43s2420340533.23.700 4 10.563 9.899 9.295 8.745 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 4.432 4.265 4.108 3.962 3.824 24 5.092 4.876 4.675 4.489 4.315 4.153 4.001 3.859 16 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887 17 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 4.419 4.243 4.080 3.928 244 8.061 7.606 7.191 6.811 6.462 6.142 5.847 5.5 1.118 10.380 9.712 9.108 .134 12.085 11.158 10.336 9.604 3.590 12.462 11.470 10.594 070 4.843 4.635 4.44 4.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 7.562 7.102 6.687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4.121 3.963 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970 6.399 6.044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 4.137 3.976 23 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718 7.230 24 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 4.143 3 622 14.094 12.783 11.654 10.675 9.823 9.077 8.42 843 7.330 6.873 6.464 6.097 467 5.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 4.151 3.9 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.154 3 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4.335 4.157 3.992 27 28 915 1 15.141 13.591 12.278 11.158 10 198 9.370 8650 8022 7470 6.983 6551 6166 5820 55105229 4975 4743 4531 337 4.5') 3:0.4 30 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7.496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4.339 4.160 3.995 93 17.159 15.046 13.332 11.925 10.7 779 8.951 8.244 7.634 7.1 871 5.548 5.258 4.997 4.760 4.544