Wendell's Donut Shoppe is investigating the purchase of a new $52,000 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,900 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,800 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. Click here to view Exhibit 78-1 and Exhibit 78-2. 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 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 $16,835 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 intlows 2 Discount factor 3. Internal rate of retum 4. Internal rate of retum % % EXHIBIT 72-1 Present Value of $1a Periods 4% 5 72 8% 99 10% 119 12% 13% 14% 15% 16% 17 18% 19% 20% 21% 22% 23% 265 25% 1 0962 0952 0943 0935 0926 091 0909 0901 0893 0.885 0877 08700862 0855 0847 0840 0833 0826 0820 0813 0806 0800 2 0925 0907 0890 0.873 0857 0842 0826 0812 0797 0783 0769 07560743 0731 0718 0706 0694 0683 0672 0.664 0650 0640 3 0.889 086408400816 0794 0772 0751 0731 07120693 0675 0658 0641 0624 0.609 0.593 0.579 0564 0.551 0.537 0.524 0512 4 0855 0823 0792 0763 0.735 0708 0683 0659 0636 0613 0.592 0.572 0552 0534 05160499 0.482 046704510437 0423 0410 5 0822 0784 0747 0713 0681 0650 0621 0593 0567 0543 059 0497 0.476 0456 0437 0419 0402 0386 03700355 0341 0328 6 0790 0746 0705 0666 0630 0596 0564 0535 0507 0.480 0456 0432 04100390 0.370 0352 0335 0319 0303 0289 0275 0262 7 0760 0711 0665 0623 0583 0547 0513 0482 0452 0425 0.400 0376 0354 0333 0314 0296 0279 0 263 0249 0235 0222 0210 B 0731 06770627 0582 0540 0502 046704340404 0376 0,351 0327 0.305 0285 0266 0249 0233 0218 0204 0191 0179 0168 9 07030645 0542 0544 0500 0 460 0424 0391 0361 0333 03080284 0263 0243 0225 0209 0194 01800167 0155 014 0134 90 0676 0614 0558 0508 0463 0422 0386 0352 0322 0295 0270 0247 0227 0208 0191 076 01620149 0137 0126 0116 0.107 11 0650 0585 0527 0475 0429 0.388 0350 03170287 0261 0237 02150195 0178 0162 018 0135 012301120103 0094 0086 12 06750557 0497 0444 0397 0356 0.319 0286 0257 0.231 0208 0187 0168 0152 0137 0124 0112 0102 0092 0083 0076 0069 13 060 0530.0469 0415 036 0326 0290 0258 0229 0204 0182 0163 014501300116 0104 0093 008 0075 0.06 0061 0055 0571 0505 042 0388 0340 0299 0263 0232 0205 0181 010 011 01250111 0099 0088 0078 0069 00620055 0049 0.044 15 05550481 0417 0.362 0315 0275 0239 0209 0183 0160 0100123 0108 0095 0084 0074 0065 0057 0051 0045 0.040.0035 16 0534 045 0794 0339 0292 0252 0218 018 013 01410123 01070093 0081 0071 0062 0054 0047 0042 0036 0032 0028 12 0513 0436 037 03170270 0231 0198 0170 016 01250108 0093 000 006900600052 0045 0039 0034 0030 0026 0023 18 04M 04 0350 0296 0.250 0212 010 0153 0130 01110095 0081 0069 0059 0051 0044 0038 0.0320028 0024 0.021 0018 19 0475 0.396 0331 027 0232 011 03640138 0.116 QU098 0083 007000600051 0043 00370031 002)0023 00200017 COM 20 0456 037 0312 025 02150178 019 0124 0904 0087 0073 0061 0051 0041 0.03 0031 0026 0022 0019 00160080012 21 0439 039 0794 0242 0199 0164 01350112 0093 0077 0064 0.053 0044 0037 001 0026 0022001800150013 001 0009 22 0422 0342 0278 0226 01840150 0123 0101 OORU 0068 0056 004 0038 00320026 0022 0018 00150000011 00090007 23 0405 0326 0262 021101700138 0110 0091 0074 0060 0049 00400033 0027 0022 0018 00150012 0010 0009 0007 0006 24 0390 0.3100247 0197 01580126 0102 0082 0066 0053 0043 0035 0028 0023 0.019 00150010010 0008 0.007 0.006 0005 25 0.375 0295 023 0184 016 019 0092 0074 0059 0047 0038 0030 0024 0020 0016 0013 0010 0009 0.007 0.006 0005 0005 26 0.361 021 0220 01 0050106 0084 0056 0053 0042 0033 0026 0021 001 001 0011 0009 0007 00060005 0004 0.003 27 0347 0.26% 0207 0161 0125 009 00760060 0047 0037 0029 0023 001 0010011 0009 0.007 0.006 0005 0004 0003 0002 2 0333 0.255 096 0950 0196 0.090 0069 0054 0042 0033 0025 0.020 0016 0012 0010 0000 0006 0005 0004 0000 0002 0002 29 0321 024) 018501007 OOR2 0063 004 0037 0029 002 0017 OM 001 0008 0.006 0005 0004 0003 0002 0002 0002 30 0308 02310174011 0.099 00750057 004 003) 0026 0.020 00150012 0009 0.007 0005 0004 0000 0001 0002 0002 0.001 60 0208 020097 0067 004 0032 0022 005 001 0.008 0.005 0004 0003 0002 0001 0.001 000 0000 0000 0000 0000 0000 EXHIBIT 70-2 Present Value of an Annuity of $1 in Arrears; Periods 4 5 64 71 8% 9 10% 113 12% 0% 159 16% 17% 18% 195 20% 21% ZZK 23 24% 25 1 09520952 0943 0935 0926 0917 09090901 0893 0885 0877 0870 0.862 0855 0.847 0840 0833 0826 0820 084308060800 2 1886 1859 1833 1808 1783 1759 1736 1713 1690 1668 1647 1626 1605 1585 1566 1547 1528 1509 1492 1474 1457 1.440 3 2.775 2723 2673 2624 2577 2531 2487 2444 2402 2361 2322 2283 2246 2210 2174 210 2106 2074 2042 2011 1981 1952 4 3630354634653387 3312 32403170 3102 3037 2.974 2914 2855 2798 2743 2690 2639 2589 2540 2494 2448 2404 2362 5 4452 43294212 4100 3.993 3.890 3791 3.696 3605 3517 3.433 3352 3274 31993.127 3058 2991 2926 2864 2803 2745 2689 6 5.242 50754917 4767 46234486 4355 4231 4111 3998 3889 3784 3685 3589 3.498 3410 3326 3245 31673092 3020 2951 2 6.002 5786 558253895206 5033 4868 4712 4564 4423 4288 4160 4039 3922 3812 37063605 3 508 3.416 3327 3242 3161 8 6733 6463 6210 5971 5747 5535 5335 5146 4968 47994639 4487 4344 4207 4078 3954 3837 3726 3619 3518 3421 3329 9 7435 7108 6 82 6.515 6 247 59955759 5537 5328 5132 4946 4772 4607 4451 4303 4.163 40313905 378536733566 3463 10 811 77227360 7024 6710 6.418 6145 5.889 5650 5426 5216 5019 4833 4659 4494 4339 92 40543923 3799 3682 3571 11 8760 83067887 7499 7139 6 805 6495 6 207 5938 5687 5453 5234 5029 48364656 4.486 4327 4177 4035 3.902 37763656 12 9385 8863 83847943 75367161 6.814 6492 6194 5918 5660 5421 597 4988 47934611 4 439 4278 4127 3985 3851 3725 17 59860394 8853 358 7904 7487 2103 67506424 6122 5842 5583 5 M2 511 4910 4715 4533 4.362 4203 4053 3912 3780 10563 989992958745 82477867367 6982 6 628 6302 6002 5724 5668 5229 5008 1802 4611 4432 4265 408 3.2 1824 is 11118 103809712 90 8559 8061 707191 6811 6462 612 5.847 5575 5324 5.092 4876 4675 489 431541534001 3859 16 11652 9838 101069447 8851 8313 7824 7379 6974 6604 62655954 5658 S405 51624938 4730 456 4357 419 4032 27 12 2166 112790477 9763 9122 8544 8022 7549 712067296373 6047 5749 54755222 4990 47754576 4391 4219 4059 3.910 18 12.650 1160090828 10.050 9.372 87568201 2702 725068406 467 6128 588 5534 5273 5033 48124608 419 424) 4050 3928 13134 12.085 11158 236 9504 950 365 739 7366 6938 6550 6798 5877 5584 516 50704843 4635 4442 4263 4097 3942 20 1900 12.2 11470 10.5945 51 73 74 7025 6623 6290 5995628 5353 51014870 4657 4400 427941103954 21 M029 1221 11764 10.836 100179292 8649 B075 7562 7102 6687 6315973 5665 5384 51274891 4675 476 4292 41213963 22 M451 133 042 1106190201 942 772 8175 764571206743 6359 60115601 5410 5149 4.909 460 4488430241303970 2 14857 10 12.303 11272 10.371 9580 BR 8266 778 7710 67826993 604 57235.02 577 425 4203 499 431 4137976 24 5247 11 2550 1140 10529 9707 8985 8348 7784 7283 68356434 60735745 5451 51824032 474507 4318410 1981 25 15622 10 12783 11654 16750823907842271 7330 6.873646460075766 5467 5195 454 4721 45144323 4107 1985 20 15 383 1175 100 11826 1030 9929 01 84 786 7372 606 6491 61185780 5.60 5.200 4055 4728 4520 41784151398 16330 14643 1321111087 10935 027 9237 8.548 794) 7409 695 654 6136 5.7 5432 5 215 4964 4734 4524 4332 4154390 28 16663 189 1406 12.137 11051 116 9307 8602 7584 741 6.961 554 6152 5810 5502 52234970 4739 4528 435 41573992 29 115541591 12278 115 198 970 650 022 7470 6983 6551 666 5x20 5510 5229 4975 470 471 437 41592094 30 17252 15372 765 12 409 11258 0274 9.427 694 055 7496 70036566 617 529 5517 5235 4975 476 453441940 1995 40 1974 17505046 120 1125 8757 97798451 244 75 71056642 6233 58715518 5.258 4 997 4760454464741663999