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 128-1 and Exhibit 128.2. 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 $10,515 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 Internal rate of return 4 Internal rate of return 10.000 4.000 13 % % EXHIBIT 120-2 Present Value of an Annuity of $1 in Arrears: [-] Periocis 4 SX BS 99% ON 123 154 ME 17% 18 19 2015 21 22 23 1 09620952 0943 0935 0.926 0907 09090901 0893 088 087 08700862 08:55 0847 08400833 0826 0820 0813 0.806 0800 2 1886 1859 1833 1808 3783 1759 1736 1713 1690 1668 1647 1626 1605 1589 1566 1547 1528 1509 1492 144 1457 1440 2775 2723 2673 2624 2577 2531 2487 2444 2402 2361 2322 223 224 2210 2174 20 2006 2014 2012 2011 1981 1952 4 3630 3.546 3.455 337 3312 3.240 31703102 3037 29742.914 2899 29 2143 2690 2639 2589 2540 2494 2448 2404 2362 5 4452 4329 42124039933 890 391 3696 3605 3.517 3433 3352121 3199 327 3058 2991 2926 2854 2803 2745 2689 6 5.242 5076 4912 4767 4623 4686 4355 4231 4111 3998 389 3784 3685 3589 3498 3410 3326 3245 31673092 3020 2955 7 60025786 5582 5389 5206 5033 4868 4712 4564 4423 428 410 4039 3922 3812 37063.6053508 34163327 3242 3161 6723 6.05 6210 5.971 5247 5.535 5335 5546 4968 47994639 4487 4346 4207 4078 3954 3.827 3726 3619 3598 301 3329 9 7435 7108 6 802 6515 6.2475995 5759 5.537 5328 532 4905 4772 607 4451 4303 4163 4031 3905 3.786 3673 3566 3463 10 8111 7722 7360 7024 6710 5418 6145 5889 5650 5426 5.26 5.099 4833 4659 4494 43394192 4054 3923 3199 3682 3571 11 8760 83067887 7499 7139 6.805 6495 6 207 5938 5687 5.453 5234 5029 48364656 4486 4322 4177 4035 3902 3776 3656 938588383847943 7536 7161 6.814 6 492 6194 597 5660 5421 5197 4988 479346114439 42784273.985 3851 3725 996 994 8853 8358 7904 7487 7103 67506424 612258425583 5342 511 4910 4715 45334362 4203 4053 392 3780 M 20563 98999295 2.745 8244 77867367 6982 6.628 6202 6002 5724 5468 5229 5008 4802 4611 442 4265 408 2962 3824 11118 1030 9712 9108 8559 8061 7606 7191 681 64526542 58475575 5321 5092 4876 4675 4489 435 4150 4001 3859 16 11652 10838 10306 9447 8851 833 7824 7379 6974 6601 6.265 5954 5668 005 5 2 493 47304536 437 41894007887 1 2166 11274 90477 9763 902 8544 8022 7549712067296373 604 579 5475 5222 4990 6775 476 491 4219 4058 3.910 18 12659 160 10.828 300599372 8.756 8201 7702 7250 640 6467 128 5811 5534 5.273 5031 48124608 4419 4243408028 19 11134 105 11158 10.336 9604 8950 8365 789 7366 6938 650 1931 5584 535.070 43 4635 442 423 4057 3942 20 1359012462 470 549818 9 129 8514 793 7409 7025 6623 6259 5929 562 5.353 5101 4870 4657 4.45042194103954 21 12029 221 11 36 0017 9292 8649 8075 7562 702 6687 6312 593 56655386 5127 491 467 44754292 4121 1 22 14.451 13153042 1061 10 201 9 42 72 8176 7645 2170 6743650 5.0 5696 5410 594909 4690 444302 4030 2920 2 857 14230311272 an 9580 883 266 721 720 692 62906044 57235432 M2 4925 4203 4.499 479 24 15 247 1799 12.550 1669 10.529 9.707 985 8348 7784 7283 685 6434 6073 5.746 5051 59824937 470 4507 418 41981 25 15.022 094 12783 1654 10675 923 907 822 7843733064646097 5766 467 51954948 4721 45M 432141295 15 SR 5 2003 1126 10 810 929 91617896 72 6 6491 6.1983 5.40 5 206 456 472 4520 43284157 6330 M603 1321197 0935 028 9202548 7903 565 60 59 542 5215 4964 474 45 4332415490 28 1666) 11406 1137 1105110116 9307 02 7947 651461525.810 5502 52234970 47394528 43054157 3997 1664151 1591 1277 158 1070 8650 YAXO 83 65 66 50 5510 5229 497 40454234154396 10 232 15372 5 12.409 25 10.774 94 055 YA 7003 655 6177 509 55752354504746 454 4370 41503095 40 15915045332 1192 07579 244 7634 2105662 5568 524997430454074999 EXOBIT 120-1 Present Value of St. 4 W 9 Periods 55 6 9% 10 11 BRE 141 159 200275 24 25 1 0962 0952 0943 0935 0926 097 09090901 0.893 085 0877 8700862 0855 0.841 080 08330.826 0.820 081 0806 000 2 0925 0907 08900373 085710842 0826 0.812 0797 0.783 079 0.756 0243 0731 0.718 07060694 0683 0672 066 06500640 3 0889 0864 OMO 0.816 0794 072 0751 0731 0712 0693 0675 0658 0541 0624 06090593 0579 0564 0551 0.537 0524 0512 4 0855 0823 0292 0763 0735 0708 0683 0659 0.636 06 05412 0.572 0552 0534 05160499 0482 0467 0451 0437 0423 0410 5 0.822 0784 0147 0713 0681 0650 0621 0593 0567 0543 0519 0497 0.476 0456 0.637 0419 04020386 03700355 03410328 0.790 0.746 0.705 0666 0.630 0596 0564 0535 0.507 0480 0456 0432 04100390 03700352 0335 0319 0303 0289 0275 0262 7 075000665 0623 0583 0547 0513 0482 0452 0425 0400 376 0154 0.33 0344 0.296 0279 0.263 0.249 0235 0222 0210 8 0.731 0671 0627 0582 0540 0502 04670434 0004 0376 0351 0127 0305 0285 0 266 0249 0.233 021 0204 0.191 01790168 9 0703 06450592 0541 0500 0.460 0424 0.391 0.361 0333 030 0284 0.263 0243 0225 0209 0194 0100120155 014 0134 10 0676 064 0.558 0508 0463 0422 0.386 0352 0322 0295 020 0247 0227 0208 0191 017601620149 0137 0126 0.116 0107 11 0650 0585 0527 0475 0.429 038 0350 03170287 0261 0237 0215 05 0178 0162 018 0135012301120103 0.094 006 0625 0.557 0497 0444 0.397 0356 0319 0.286 0257 0231 0.209 0187 0368 0152017 0124 011201070092 003 0076 0.069 13 0 601 0530 0469 04150368 0.326 0290 0258 0.229 0204 120163 015 01300116 0.104 0093 0084 005 0068 0061 0055 44 05770505 042 0388 0340 0299 0263 0232 0205 0181 0760 0141 0125 0.111 0099 008 0078 0069 0062 0.055 0009 0044 15 0555 0.481 0.417 0.362 0.315 0275 0239 0209 0183 0160 0100 023 010 0095 0084 007 0065 0057 0.051 0045 0040 0035 16 054 045 0.394 0339 0292 0252 021808 0.163 01 0173 0907 693 0081007 0062 0054 0047 0002 00360032 0028 050 043 0371 0.31 0.270 0231 0198 0170 0546 0125 010 0093 000 006900600052 0045 0039 0.034 000 0026 0023 049404160350 0296 0 250 0212 01800153 010 0111 0005 0081 0009 00S 005100010038 00320028 0024 0021 00 19 0.65 0.06 0.331 0271 0232 0124 0164 013 0116 0098 OK 00000600051 000 0037 003 0027 0023 0020 00 00 0456 037 032 025 02150178 0149 0124 0104 0087 0073 0061 0.05 004 00370031 0026 0022 0019 003 004 0012 21 DA 039 0294 0242 0199 0164 01350120093 0.077 0064 005 004 003 001 0.026 0022 000 0015 000 0011 0009 22 0.02 0.2 02780226 016 015001230101 0.083 006 0056 0046 0038 0032 00260022 0.018 00150010011 0009 0001 046726 0262 071 01700138 011200910074 0060 0049 0040 0033 0027 0022 003 0015 000 0010 0.00 0.00 0.006 0.00030 0.24 0192 0158 0126 0102 0082 0.066 0053 0043 0035 0028 002 0019 0015 000 000 000 000 000 0005 0.375 025 020 01 016 0116 0092 6074 00500012 000 000 0024 0020 000 000 0000 0000 0000 0000 0005 0004 0.361 0281 0220 0172 005 006 000066 005) 0002 0033 0026 0.021 00100100100000007 0006 0.005 0004 0.003 0347 026 0207 1 0125 00 00 00 00 0029 0023 0.01 OOM 0011 0000 0000 0005 0.005 0.004 0000002 23 0.3330255 010 0101 0000 0000 0054 000 0002600200016 00120010 000 0006 0005 0004 0003 0002 0002 0301 0243 015 01 0907 02 05 0029 0022 001 000 000 0005 0.005 0004 0.003 0002 00 0308 071 014 OM 0039 00 00 00 00 0026 0.020 000 000 000 000 0005 004 000 000 000 000 0001 020 02 009 000 000 002 003 000 000 000 0004 000 000 0001 0001 000 0000 0000 0000 0000 0000 HE
