Wendell's Donut Shoppe is investigating the purchase of a new $52,100 donut making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,100 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2.800 dozen more donuts each year. The company realizes a contribution margin of $170 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 7B-1 and Exhibit 7B-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 $11,500 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. Intemal rate of return 4. Internal rate of return 96 % EXHIBIT 7B-1 Present Value of S1: F Periods 4% 5% 69 75 8% 9% 10% 11% 12% 13% 14% 15% 168 12 18% 198 205 1 0.962 0.952 0.943 0935 0926 0917 0.909 0.901 0893 0885 0.877 0.870 0462 0855 47 0840 083 0826 0.820 081 0806 0800 213 222 239 24% 25% 2 0.925 0.907 0890 0.873 0857 0842 0826 0812 0.797 0.783 0769 0756 0943 072 0718 0706 0694 0683 0672 0661 0650 0640 3 0.889 0.864 0.840 0.816 0.794 0772 0751 0731 0712 0.693 0675 0658 0541 624 06090593 0579 0564 0551 0.537 0524 0512 4 0855 0.823 0792 0763 0.735 0.708 0683 0659 0636 06130592 0572 0552 0534 0516 0499 0482 0.467 0451 0.437 0423 0410 5 0.822 0784 0.747 0713 0681 0.650 0621 0593 0.567 0543 0.519 0497 0.476 0.456 0437 0.419 0.402 0.386 370 0355 03410328 6 0790 0746 0.705 0666 0630 0.596 0.564 0535 0507 0480 0.456 0432 04100390 0370 0352 0335 0319 0.303 0289 0275 0.262 2 0.760 0711 0.665 0.623 0583 0547 0513 0482 0.452 0425 0.400 0.376 0354 0.333 0314 0296 0279 0263 0.249 0235 0222 0210 8 0.731 0677 0627 0.582 0540 0502 0.467 0434 0404 0.376 0.351 0327 0.305 0285 0.266 0249 0233 0218 0204 0.191 0179 0168 9 0.703 0645 0592 0544 0.500 0460 0.424 0.391 0361 0.333 0308 0284 0 263 0243 0225 0 209 0194 01800167 01550144 0134 10 0676 0614 0558 0.508 0463 0422 0.386 0352 0322 0295 0270 0.247 0227 0.208 0191 0176 0.162 019 0137 0.126 0116 0107 11 0.650 0585 0527 0475 0.429 0388 0.350 0317 0287 0261 0237 02150195 0178 0162 018 0135 0.123 0112 0103 0094 0086 12 0625 0557 0497 0.444 0.397 0356 0.319 0286 0257 0231 0208 0187 0168 0152 0137 0.124 0112 0102 0092 0083 0.076 0069 13 0.601 0530 0.469 0415 0.368 0326 0.290 0258 0229 0204 0.182 0163 014501300116 0104 0093 0.084 0.075 0068 0.061 0055 14 0.577 0.505 0442 0.388 0.340 0.299 0.263 0232 0205 0181 0.160 0141 0125 0.111 0.099 0088 0078 00690062 0055 0.049 0.044 15 0555 0.481 0.417 0362 0.315 0275 0.239 0209 0183 01600140 0.123 0108 0.095 0.084 0074 0.065 0.057 0051 0045 0.0400035 16 0.534 0.458 0394 0339 0292 0252 0.188 0163 0141 0123 0.107 0093 0081 0071 0062 0054 0.047 0.042 0036 0032 0.028 17 0.513 0436 0.371 03170270 0.231 0198 0170 0146 0125 0108 0.093 0.080 0069 0060 0,052 0045 0039 0034 0030 0026 0.023 18 0.494 0.4160350 0296 0250 0.212 01800153 01300111 0095 0081 0.069 0059 0.051 0044 0038 032 0028 0024 0021 0018 19 0.475 0.396 0331 0277 0232 0.194 0164 0138 0116 0.098 0083 0070 0.060 0051 0043 0037 0,031 0.027 0023 0020 0017 0014 20 0.456 0.377 0312 0258 02150178 0149 0124 0.104 0.087 0073 0061 0051 0043 0037 0031 0.025 0.022 0.019 0.016 0014 0012 21 0439 0.359 0294 0242 0199 0164 01350112 0.093 0077 0.064 0053 0044 0.037 0031 0026 0.022 0018 0.015 0013 0011 0.009 22 0422 0.342 0278 0226 0184 01500123 0.101 0083 0068 0056 0046 0.038 0.032 0026 0022 0.018 0015 003 001 0009 0007 23 0406 0.326 0262 0211 01700138 0112 0091 0074 0.060 0049 0040 0033 0.027 0022 0.018 0.015 0.012 0010 0009 0007 0006 24 0.390 0.310 0247 0197 0158 0126 0102 0082 0066 0.053 0043 0.035 0028 0.023 0.019 0.01 0.013 0010 0008 0.007 0.006 0005 25 0375 0.295 0 233 0184 0146 0.116 0.092 0.074 0.059 0,047 0038 0.030 0024 0.020 001 0.013 0010 0.009 000 0000 0005 0004 26 0361 0.281 0220 0172 01350106 0084 0.066 0053 0042 0033 0.026 0021 0.01 0.01 0011 0009 0.007 0.006 0005 0004 0003 27 0347 0.268 0207 0161 0125 0.098 0076 0.060 0047 0037 0029 0023 0018 0.01 0.01 0.009 0.007 0006 0005 0.004 0.003 0.002 28 0333 0.255 0196 0150 0116 0.090 0.069 0.054 0042 0033 0,026 0020 0,016 0012 000 000 0006 0.005 2004 2003 0002 0.002 29 0321 0.243 0185 014 0107 00B2 0063 0.04 003 002 0.022 01010010011 0000 0006 005 0004 0.003 0002 0002 0002 30 0308 0231 0174 0131 0099 0075 0057 0044 0033 0.026 00200015 0012 0.00 0.007 0005 0004 0003 0003 0.002 0.002 0001 40 0208 0142 0097 0062 004 0032 0022 0.015 000 000 000 000 000 000 0001 0.001 0.001 0000 0000 0000 0000 0000 EXHIBIT 70-2 Present Value of an Annuity of $1 in Arrears: 193 Periods 4 5% 6% 8% 9 10 11% 12% 13% 14% 15% 16% 17% 18% 20% 21% 22% 23% 24% 25% 1 0962 0952 0.943 0935 0926 0917 0909 0901 0893 0885 08770870 0862 0855 0847 0840 0.833 0826 0 820 08130806 0.800 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 2.723 2673 2624 2577 2531 2.487 2444 2.402 2361 2322 2283 2246 2210 2174 2140 2106 2074 2012 2011 1981 1952 4 3.630 3.546 3.4653387 3312 3.240 3.170 3.102 3037 2974 2914 2.855 2798 2703 2690 2639 2589 2540 2494 2448 2404 2362 5 4452 43294212 4100 3993 3890 3.791 3696 3.605 3.517 3.433 3352 3274 3.199 3127 3.058 2991 2926 2864 2803 2745 2689 6 5.242 5076 4917 4767 4623 4486 4355 4231 4111 3.9983889 3.784 3685 3589 3498 3410 3326 3245 3.167 3092 3020 2951 7 6.002 5786 5.582 5389 5206 5033 4868 4712 4564 4423 4288 4160 4039 3.922 3,812 3.706 3.605 3.508 3.416 3327 3242 3.161 8 6.733 6 463 6.210 5971 5747 5535 5335 5146 4968 4799 4639 4487 4344 4207 4078 3954 3.837 3.726 3619 3518 3.421 3.329 9 7435 7108 6.802 6515 6.247 5.995 5759 5537 5328 5132 4946 4772 4607 4451 4303 4163 4031 3905 376 36733566 3463 10 8111 7722 7360 7024 6.710 6.418 6.145 5889 5650 5.426 5 216 5019 4833 4659 4494 43394192 4054 3.923 3799 3682 3.571 11 8.760 8306 788774997139 6.805 6.495 6 207 5.938 5687 5453 5 234 5029 4836 4656 4486 4327 4177 4.035 3.902 3776 3.656 12 9385 8863 8384 7943 7536 7161 6.814 6.492 6.1945.918 5660 5421 5197 4988 4793 4511 4 439 4278 4.127 3985 3851 3725 13 9 986 9.394 8853 8.358 7904 7487 7103 6750 6.424 6.122 5842 5583 5342 5118 49104.715 4533 4362 4203 4053 3912 3780 14 10.563 9.899 9.295 8.745 8244 7786 7367 6.982 6 628 6 302 6002 5 724 5468 5229 5008 4802 4611 4432 4265 4108 3962 3824 15 11.118 10.3809712 9108 8.559 8061 7606 7191 6.811 6.462 6142 58475575 5324 5.092 4876 4675 4 489 43154153 4001 3859 16 11652 10.838 10106 9447 8851 8 313 7824 7379 69746604 6 265 5954 5668 5.405 5162 938 4730 4536 4357 41894033 3887 17 12 166 1127410477 9763 9122 8.544 8022754971206.729 6.373 6.047 5749 5475 5222 4990 4775 4576 4391 4219 4059 3910 18 12.659 11690 10828 10.059 9 372 8756 8201 7702 7250 6840 6 467 6128 5818 5534 52735033 48124608 4.419 4243 4.080 3.928 19 13.134 12.085 11158 10336 9604 8950 8365 7839 7366 6.938 6.550 6.198 5877 $ 584 5 316 5.070 4843 4635 4442 4263 4097 3942 20 13.590 12.462 11470 10.594 9818 9129 85147963 7469 7025 6623 6 259 5929 5628 5353 5101 4870 4657 4.460 4279 4110 3.954 21 14.029 12.821 11764 10836 10.017 9292 8.649 8.075 7562 7102 6687 6312 5973 5.665 5384 527 4891 4675 4476 4 292 4121 3.963 22 14.451 13163 2042 11061 10.2019.442 8712 817676457170 6743 6.359 6011 5696 5410 549 4909 4690 4488 4302 4130 3970 23 1.857 13.489 12 303 11272 10371 9580 8883 8266 7718 7230 6792 6.399 6044 5723 5432 5167 4925 4703 4499 4311 4.137 3.976 24 15 247 13 799 12.550 1146910529 9707 8985 8348 7784 7283 6835 6.434 6073 5745 54515182 4937 4713 4507 4318 4143 3981 25 15 622 14094 12783 1654 10 675 9.823 9077 8.422 78437330 6873 6.464 6097 5766 5467 51954948 4721 4514 4323 4147 3.985 26 15.983 1375 13.003 11826 108109.929 9161 8 488 7896 7372 6906 6491 6118 578 5480 5 206 4956 4728 4520 4328 4151 3988 27 16 330 14643 13 211 11987 10935100279 237 8.548 7943 7409 6935 6.514 6136 57985492 5215 4964 4734 4524 4332 41543990 28 16 663 14898 13.405 12.137 1105110116 9 307 8602 7984 74411 6961 6534 6152 5810 5502 5223 4970 47394528 4335 4157 3992 29 16.984 15.141 13.591 12.278 11.158 10.198 9370 8650 8022 7470 6983 6551 6166 5.820 5510 5229 4975 473 4531 4337 159 3994 30 17.292 15 372 13765 12 409 11258 10274 9 427 8694 8055 7496 7003 6.566 6172 5.829 5.512 5 235 4979 474 4534 43394.160 3.995 40 19 793 17159 15046 13 332 11925 10757 9779 8951 8244 7634 71056642 6233 SHI 5518 525 4997 4760 4544 4347 41663999