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Splendid Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Splendid has accumulated regarding the
Splendid Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Splendid has accumulated regarding the new machine (Click the icon to view the information.) Prasert Value of $1 table Present Value of Annuhof 51sable Future Value of 1 sabie Future Value of Ammulty of $1 Read the requirements Requirement 1. Calculate the following for the new machine a. Nel presen Data table The net prese X Requirements Cost of the machine $110,000 Incressed contribution margin $20,000 Lite of the machine 10 years Raquired rate of return Splendid estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offsat that value, ignore income tax issues in your answers. Assume all cash flows occur at year-end except for intial investment amounts 1. Calculate the following for the new machine Net present value 2. b. Payback period Discounted payback period d. intemal rate of retum (using the interpolation method) a Acoual accounting rate of retum based on net initial investment (assume straight-line depreciation) What other factors should Splendid Canty consider in deciding whether to purchase the new machine? Print Done Print Done
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