Wendelf's Donut Shoppe is investigating the purchase of a new $34,600 donut making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,500 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,500 dozen more donuts each year. The company realizes a contribution margin of $160 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit78-1 and Exhibit 7B-2, to determine the appropriate discount factors) 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 answers 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 $13,755 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.) 1. Annual cash inflows 2 Discount factor 3. Internal rate of return 4. Internal rate of retum % EXHIBIT 78-2 Present Value of an Annulty of S1 in Arrears! Periods 4% 53 6% 8% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 1 0.962 0952 0943 0935 0.926 0.917 22% 23% 24% 0909 0901 0.893 0885 0.877 0.870 0862 0855 0.847 0.840 0833 0826 0.820 0813 0806 0800 258 2 1886 1859 1833 1808 1783 1759 1736 1713 1690 1668 1647 1626 1605 1585 1566 1547 1528 1509 1492 1474 1457 1440 3 2775 2723 2673 2624 2577 2531 2487 2444 2402 2361 2322 2283 2246 2210 2174 2140 2106 2074 2042 2011 1981 1952 4 3630 3.546 3.4653387 3.312 3 240 3170 3102 3037 2.974 2914 2855 2798 2743 2690 2639 2589 2540 2494 2448 2404 2362 5 4.452 4329 4212 4.100 3993 3.890 3.791 3696 3.605 3.517 3433 3352 3.274 3199 3127 3.058 2991 2926 2864 2803 2745 2689 6 5242 5076 4917 4767 4623 4486 4355 4231 4111 3.998 3.889 3784 3.685. 3.589 3.498 3.410 3.326 3245 3167 3092 3020 2951 7 6.002 5.786 5.582 5389 5 206 5.033 4868 4712 4564 4423 4288 4160 4039 3922 3812 3706 3605 3.508 3.416 3327 3242 3161 6.733 6.463 6210 5.971 5.747 5535 5335 5.16 4968 4799 4639 4487 4344 4207 4078 3.954 3.837 3.726 3619 3.518 3421 3329 9 7435 7108 6 802 6.515 6.247 5.995 5759 5537 5328 5132 4.946 4772 4.607 4451 4303 4163 4031 3.905 3786 3673 3.566 3463 10 8111 7722 7360 7024 6710 6418 6145 5889 5650 5426 5216 5019 4833 4659 4494 4339 4192 4054 3923 3799 3682 3.571 11 8760 8.306 7887 7499 7139 6 805 6495 6 207 5938 5687 5453 5 234 5029 4836 4656 4.486 4327 4177 4035 3902 3776 3.656 12 9385 8863 8384 7943 7536 7161 6.814 6 492 6.194 5918 5660 5.421 5197 4988 4793 4611 4439 4278 4127 3985 3851 3725 3 9.986 9.394 8.853 8358 7904 7.487 7103 6.750 6.424 6122 5842 5583 5342 5.118 4910 4715 4533 4362 4203 4.053 3912 3780 14 10 563 9.899 9.295 8.745 8 244 7786 7367 6.982 6 628 6 302 6002 5724 5468 5.229 5008 4802 4611 4432 4265 4108 3962 3824 15 11118 10.380 9712 9108 8.559 8.061 7606 7191 6811 6.462 6142 5.847 5.575 5324 5.092 4.876 46754489 4315 4153 4001 3859 16 11.652 10.838 10.106 9.447 8851 8313 7824 7379 6974 6,604 6265 5954 5668 5.405 5162 4938 47304536 4357 41894033 3887 17 12 166 11.274 10.477 9763 9122 8.544 8022 7549 7120 6729 6.373 6047 5749 5.475 5.222 4.990 4775 4.576 4391 4219 4059 3910 18 12.659 11690 10 828 10.059 9.372 8.756 8 201 7702 7250 6840 6 467 6128 5.818 5534 5.273 5033 48124608 4419 420 4080 3928 19 13.134 12.085 11158 10.336 9604 8.950 8.365 7839 7366 6.938 6550 6,198 5.877 5.584 5.316 5.070 4843 4635 4442 4263 4097 3942 20 13 590 12.462 11.470 10.594 9.818 9.129 8514 7963 7469 7025 6623 6.259 5929 5628 5353 5101 4870 4657 44604279 410 3954 21 14029 12821 11764 10.836 10 017 9292 8649 8.075 756271026687 6.312 5973 5665 5384 5127 4891 4675 4476 4292 4121 3963 22 14 451 13.163 12.042 11.061 10 201 9442 8772 8176 7645 2170 6.743 6.359 6.0115696 5.410 5149 4909 4690 4488 4302 41303970 23 14857 13.489 12.303 11272 10.371 95808.883 8266 7718 7230 6792 6.399 6044 5723 5432 5167 4925 4703 4499 4311 41373976 24 15 247 13.799 12550 11.469 10.529 9.707 8985 8348 7784 7283 6.835 6.434 6.073 5746 5451 5182 4937 4713 4507 4318 41433981 25 15 622 14094 12.783 11654 10.675 9823 9077 8.422 7843 7330 6.873 6.464 6.097 5766 5467 51954948 4721 4514 4323 473985 26 3 988 15 983 14375 13.003 11826 10 810 9.929 9161 8.488 7896 7372 6.905 6.491 6118 5783 5 480 5.206 4956 4728 4520 4328 4151 27 16.330 14643 13 211 11987 10.935 10.027 9237 8548 7943 7409 6.935 65M 6136 5798 5492 5 215 4964 4734 4524 4332 41543990 28 16.663 1898 13.406 12137 11051 10116 9307 8.602 7984 7441 6.961 6.534 6152 5810 5502 5223 4970 4739 4528 4335 41573992 29 15 984 15.141 13 591 12278 11158 90 198 9370 8650 8.022 7.470 6.983 6551 6166 5.820 5510 5229 4975 4743 4531 4337 4159 3.994 30 17292 15 372 13765 12 409 11258 10.274 9427 8.694 8055 7496 2003 6566 6177 5829 5.517 5235 4979 4746 4534 4339 41603995 40 19 793 17159 15.046 1333211925 10757 9779 8.951 8244 7634 7105 6642 6 233 5.871 5548 5258 4997 4760 4544 4347 466 3.999