Wendells Donut Shoppe is investigating the purchase of a new $34,100 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,600 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,500 dozen more donuts each year. The company realizes a contribution margin of $2.50 per dozen donuts sold. The new machine would have a six-year useful life.

3. What is the new machines internal rate of return? (Round your final answer to nearest whole percentage.)

Internal rate of return _____%

4. In addition to the data given previously, assume that the machine will have a $8,985 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.)

Internal rate of return _____%