Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please answer 13-3 and 13-5, thank you! hapter 13 - Homework (Algorithmic 1 Chec 3. Exercise (REV) 13-3 Internal Rate of Return [LO13-3) eBook Hint
Please answer 13-3 and 13-5, thank you! hapter 13 - Homework (Algorithmic 1 Chec 3. Exercise (REV) 13-3 Internal Rate of Return [LO13-3) eBook Hint Wendell's Donut Shoppe is investigating the purchase of a new $40,000 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,200 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,000 dozen more donuts each year. The company realizes a contribution margin of $2.40 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 138-1 and Exhibit 13B-2. to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What is the new machine's internal rate of return? (Round your final answer to nearest whole percentage.) 3. In addition to the data given previously, assume that the machine will have a $10,515 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Round your final answer to nearest whole percentage.) ferences 1. Annual cash inflows 2 Intemal rate of return 3. Internal rate of return % % Chapter 13 - Homework (Algorithmic 1 4. Exercise 13-5 Preference Ranking (LO13-5) 10 points eBook Information on four investment proposals is given below: Investment Proposal D Investment required $(240,000) $742,000) $(180,000) $(1,900,000) Present value of cash 337,300 53,500 271,800 2,536,700 inflows Net present value $ 97,300 $ 15,000 $ 91,800 $ 636,700 Life of the project 5 years 7 years 6 years 6 years References Required 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. Investment Proposal Project Profitability Index Rank Preference B D
Please answer 13-3 and 13-5, thank you!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started