TB Problem Qu. 12-161 Mattice Corporation is considering... Mattice Corporation is considering investing $870,000 in a project. The life of the project would be 6 years. The project would require additional working capital of $37,000, which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $184,000. The salvage value of the assets used in the project would be $47.000. The company uses a discount rate of 13% (gnore income taxes) Click here to view Exhibit 12B-1 and Exhibit 128-2 to determine the appropriate discount factor(s) using the tables provided. Required: Compute the net present value of the project (Negative amount should be indicated by o minus sign. Round your intermediate calculations and final answer to the nearest whole dollar amount.) Net present value $ 77,488 EXHIBIT 128-1 Present Value of $1: Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 1 0962 0952 0943 0935 0926 0917 0909 0901 0893 0885 0.871 08700862 0855 0.847 08400833 0826 0820 0813 0806 0800 2 0925 0907 0890 0873 0857 0 842 0.826 0812 0797 0783 0.769 0756 0743 0731 0718 0706 0694 0683 0672 0661 0650 0640 3 0889 0.864 0840 0.816 0794 0772 0.751 0731 07120693 0675 0658 0641 0624 06090593 0579 0564 0551 0537 0524 0512 4 0855 0823 0792 0763 0735 0708 0683 0659 0636 0613 0592 0572 0552 0534 0516 0499 0482 046704510437 0423 0.410 5 0822 0784 0747 0713 0681 0650 0621 0593 0567 0543 0519 0497 0476 0456 0437 0419 0402 0386 0370 0355 0.341 0328 6 0.790 0746 0705 0666 0.630 0596 0.564 0.535 0.507 0480 0456 0432 04100390 0370 0352 0335 0319 0303 0.289 0275 0262 7 0760 0711 0665 0623 0583 0547 0513 0482 0452 0425 0100 0376 0354 0.333 034 0296 0279 0263 0249 0235 0222 0210 8 0731 0677 0627 0582 0540 0502 04670434 0404 0376 0351 0327 03050285 0266 0249 0233 0218 0204 0191 01790168 9 0703 0645 0.592 0544 0500 0460 0424 0391 0361 0333 0308 0284 0 263 0243 0225 0209 0194 01800167 0155 0.14 0134 10 0676 0614 0558 0508 0463 0422 0.386 0352 03220295 0270 0247 0227 0208 0191 0176 0162 019 01370126 0116 0107 11 0650 0.585 0527 0475 0.429 0.388 0.350 0.317 0287 0261 0237 02150195 0178 0162 018 0135 0123 0112 0103 0.094 0.086 12 0625 0557 049704440397 0356 0319 0286 0257 0231 0208 0187 0168 0152 0137 0124 01120102 0092 0083 0076 0069 130601 0530 0469 0.415 0.368 0326 0290 0258 0229 0204 0182 0163 015 0130 0116 0104 0093 0084 00750068 0061 0055 14 05770505 0.442 0.388 0340 0299 0263 0232 0205 0181 01600141 0125 0111 0099 0088 0078 0069 0062 0055 0049 0044 150555 0481 0.417 0362 0.315 0275 0239 0209 0183 0160 0100 0123 0108 0095 0084 0074 0065 0057 0051 0045 0000 0035 16 0534 0458 0.394 0339 0292 0252 0218 0188 0163 0541 0123 0107 0093 0.081 0071 0062 0054 0047 0042 0036 0032 0028 17 05130436 0371 0317 0270 0231 0198 01700146 01250108 0093 00800069 0060 0052 0045 0039 0034 0030 0026 0.023 18 0494 0416 0.350 0296 0 250 0212 0180 0153 0130 0111 0095 0081 0069 0059 0051 0044 0038 0032 0028 0024 0021 0018 190.475 0.396 0331 0.277 0232 0194 0164 0138 0116 0098 0083 007000600051 0043 0037 0031 0027 0023 002000170044 20 0456 037 0312 0258 02150178 019 0124 0104 0087 0073 0061 0051 0043 0031 0031 0.026 0022 0019 0016 OOM 0012 21 0439 0359 0294 0242 0199 0164 013501120093 007 0064 0053 0044 0037 0031 0026 0022 0018 0015 0013 001 0.009 22 0422 0.342 0278 0226 0184 0150 0.123 0101 0083 0.068 0056 0046 0038 00320026 0022 0018 0.015 001 0011 0009 0007 23 0406 0326 0262 0211 01700138 0.112 0.091 0074 0060 0049 0040 0033 0027 0022 0018 0015 0.012 0.010 0009 0007 0006 24 0.390 0310 0.247 0197 0158 0126 0102 0082 0066 0053 0043 0035 0028 0023 0.019 0015 0013 0010 0.008 0.007 0006 0005 25 0375 0295 0233 01840146 0116 0092 0074 0059 0047 0038 0030 0024 0020 001 0013 0010 0009 0.007 0.006 0005 0004 26 0361 0281 0220 0172 01350106 0084 0.066 0053 0042 0.033 0026 0021 001 002 0011 0009 0007 0006 0.005 0004 0.003 27 0347 0268 0207 0161 0125 0098 0076 0.060 0047 0037 0029 0023 0.018 004 0011 0009 0.007 0006 0005 0004 0003 0.002 28 0333 0.255 0196 0150 0116 0090 0.069 0.054 0042 0.033 0026 0.020 0016 0012 0.0100008 0.006 0005 0.004 0003 0002 0.002 290321 0243 0185 0141 0107 0.082 0063 0.048 0037 0029 0022 0.01 0.014 001 0.008 0.006 0005 0.004 0.003 0.002 0002 0.002 300308 0231 0174 0131 0099 0.075 0.057 0044 0033 0026 0020 0015 0012 0009 0007 0005 0004 0003 0003 0.002 0002 0001 40 0208 0142 0097 0067 0046 0032 0022 0.015 0011 0008 0.005 0004 0.003 0002 0.001 0001 0.001 0.000 0.000 0.000 0000 0000 Wendell's Donut Shoppe is investigating the purchase of a new $33,000 donut making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,700 per year. In addition, the new machine we allow the company to produce one new style of donut, resulting in the sale of 1,100 dozen more donuts each year. The company realizes a contribution margin of $2.60 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 120.1 and Exhibit 12B-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 discount factor should be used to compute the new machine's internal rate of return? (Round your answer to 3 decimal places.) 3. What is the new machine's internal rate of return? (Round your final answer to the nearest whole percentage.) 4. In addition to the data given previously, assume that the machine will have a $10,855 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 the nearest whole percentage.) $ 8,300 3.976 2. 3. 4. Annual cash inflows Discount factor Internal rate of return Internal rate of return EXHIBIT 128-2 Present Value of an Annuity of S1 in Arrears: 1 - 1 = W Periods 4 6 % 8% 9% 10% 17% 13% 1 14% 15% 0962 0952 0943 0.935 0926 0917 0.909 0 901 0893 0885 0877 0870 0862 08550 B47 0840 083 0826 0820 0 16% 17% 18% 19% 20% 21% 2 2 1886 1859 1833 1808 1783 1759 1736 1713 0 0 000 1690 1668 1647 1626 3 1605 1585 2775 2723 2673 2624 2577 2531 2487 244 2402 2361 2322 223 2246 2210 2174 210 2106 2074 2012 2011 151 152 1566 1547 1528 1509 1.492 1474 1457 1440 4 3630 3546 3.4653387 3.312 3240 31703102 3037 29742914 2855 2798 2743 2690 2639 2589 2540 2494 248 2404 2362 5 4452 4329 4212 41003993 3890 3791 3696 3605 3517 3433 3352 3274 3199 3127 3058 2991 2926 2864 2803 2745 2689 6 5242 5076 491747674623 4.486 4355 4231 411 3.9983889 3784 3685 3589 3498 3410 3326 3245 3167 3092 3070 2951 6.002 5786 5582 5389 5206 5033 4868 472 4564 4423 4288 4160 4039 3922 3812 3706 3605 3.508 341 3327 3242 3161 6733 64636 210 597 5747 5535 5335 516 4968 4799 4639 44874314 4207 4078 3.954 3837 3726 36193515142332 7435 7108 6 HOZ 6.515 6 247 5.995 5759 5537 5328 5032 4946, 4712 4607 4451 4303 4153 4031 3.905 3.786 3673 3.566 3463 8.111 7722 73607024 6710 6.418 6145 5889 5650 5426 5216 5019 4833 4659 4494 4339 4192 40543923 19 3682 357 8760 8.306 7887749971396805 6495 6 207 5938 5687 5.453 5 234 5.029 4836 4656 4486 4327 417 4035 3902 37/ 63656 9.385 8.863 8.384 7943 7536 71616.814 6.492 6194 59185660 5421 5197 4988 4793 4.611 4.439 4.278 4.127 3.985 3851 3725 99869394 8.853 8.358 7904 7487 7103 6750 6.424 6122 5842 5583 5342 5.118 4.910 4715 4533 4362 4203 40533923780 10.563 9899 9.295 8745 8.244 7786736769826628 6302 6002 5724 5468 5229 5008 4802 4.611 4432 4265 4108 3962 3824 11.118 10 3809712 9108 8.559 8061 7606 7191 6811 6462 6142 5.847 5575 5 324 5092 4876 4675 4489 431541534001359 11652 10.838 10106 947 8851 8.313 7824 7379 6974 6604 6.265 5.954 5668 5405 5.162 4938 4730 4536 4357 41894033 38 1712166 11274 10.477 9763 9122 8544 80227549 7120 6729 6.373 6047 5749 54755222 4990 4775 4576 4391 4219 4059 3910 18 12659 11690 10.828 10.0599372 8756 8201 7702 7250 6840 6 467 6128 5818 5534 5.273 5033 48124608 4419 4243 ORO 3928 13.134 12085 11158 10 336 9604 8950 8.365 7839 7366 6938 6550 6.198 5877 5.584 5.316 5070 4843 4635 4442 4263409712 20 13 590 12 462 11470 10.594 9818 9129 8514 7963 7469 7025 6623 6259 5929 5628 5353 5101 4870 4657 4460429 410 54 21 14029 12821 11764 10.836 10.017 9292 8649 8075 7562 7102 6687 6,312 5973 5665 5384 5127 4891 4675 4476 429241213963 22 14451 13 163 22042 11061 10 201 9.442 8712 81767645 7170 6743 6 359 6011 5696 5.410 549 4909 4690 4488 4302 4003970 23 3 97 14857 13.489 22 303 11 272 10371 9580 8883 8.266 7718 7230 6792 6 399 6044 5723 5432 5167 4925 47034499 43114 1 81 24 15 247 13 799 1550 11469 10529 9707 89858.348 7784 7283 6835 6434 60735745 5451 5182 4937 473 4507 43184 25 15622 1094 12783 11654 10675 9.823 9077 8.422 7843 7330 6873 6.464 6.097 5766 5467 51954948 4721 45144323 47 3385 26 15983 14375 13 003 11.826 10 810 9.929 9161 8.488 7896 7372 6.906 6491 6118 5783 5.480 5206 4956 4728 4520 4328 4513988 27 5.798 5 492 5 215 4964 4734 4524 4332 41543990 16.330 14643 13.211 11.987 10.935 10027 9.237 8.548 7943 7409 6.935 654 6136 28 16.663 1898 13406 12137 11051 10116 9307 8.602 7984 7441 6961 6534 6152 5810 5.502 52234970 475945284354573934 29 16.984 15141 13.591 12278 11158 10198 9.370 8.650 8022 7470 6983 6551 6166 5820 5510 5229 4975 4743 4531 4337 41593994 5829 5517 5235 4.9794746 4534 4339 4160 3995 30 17292 15372 13765 12.409 11258 10 274 9.427 8644 8.055 74967003 6.566 617 40 19793 1715915046 13 332 11925 10757 9779 8951 8244 7634 7105 6612 6233 5.871 5548 5258 4997 47604544437 416639