Wendell's Donut Shoppe is investigating the purchase of a new $39.600 donut making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,400 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 $2.00 per dozen donuts sold. The new machine would have a six-year useful life Click here to view Exhibit 138-1 and Exhibit 138-2, to determine the appropriate discount factoris) 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 $11,780 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.) Answer is complete but not entirely correct. 1. $ 2. Annual cash inflows Discount factor Internal rate of return Internal rate of return 10,400 3.807 14 % 22,180 % 3. 4. EXHIBIT 18-1 Present of 4 B Periods 4 5 67% 8 9 10% 11% 12 139 145 155 16% 17 18 19% 20% 21% 22% 23 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.362 0.855 0.947 0340 0.833 0826 0820 0.813 0806 0.800 2 0925 0907 0890 0.873 0.957 0,842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0683 0.672 0.661 0.650 0.640 3 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0,675 0.658 0.641 0,624 0.609 0.593 0.579 0.564 0551 0.537 0524 0512 0.855 0823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 5 0.822 0.784 0.747 0.713 0.681 0650 0,621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 6 0790 0.746 0.705 0666 0 630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0370 0352 0335 0.319 0.303 0.289 0.275 0262 7 0.760 0711 0665 0.623 0583 0.547 0.513 0.482 0 452 0.425 0.400 0.376 0.354 0.333 0314 0.296 0279 0.263 0.249 0.235 0.222 0.210 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.250 0.327 0.205 0.285 0.266 0.249 0233 0.218 0.204 0.191 0.179 0.168 0.703 0.645 0.592 0 544 0.500 0.460 0.424 0.391 0,361 0.333 0,308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 TO 0.676 0,614 0.558 0.500 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 11 0.650 0.585 0527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0.086 12 0.625 0.557 0497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0076 0.069 13 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.04 0.093 0.084 0.075 0.068 0.061 0.055 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.150 0.141 0.125 0.111 0.099 0,088 0.078 0.069 0.052 0.055 0.049 0.044 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 0.057 0.051 0.045 0.040 0.035 15 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0054 0.047 0.042 0.036 0.032 0.028 17 0.513 0.436 0.371 0.317 0.270 0.231 0.108 0.170 0.146 0.125 0.108 0.093 0.000 0.069 060 0,052 0.045 0.039 0.034 0.030 0.026 0.023 18 0.494 0.416 0.250 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0,024 0.021 0.018 19 0.475 0.396 0.331 0.277 0.232 0.194 0 164 0.138 0.116 0.098 0.083 0.070 0.060 0,051 0043 0.037 0.031 0.027 0.023 0.020 0.017 0014 20 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.025 0.022 0.019 0.016 0.014 0.012 21 0.439 0.359 0 294 0242 0.199 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0026 0.022 0018 0.015 0013 0.011 0.009 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 23 0.406 0.326 0.252 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.040 0033 0.027 0.022 0,015 0,015 0,012 0010 0.009 0.007 0.000 24 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.002 0.066 0.053 0043 0.035 0.025 0.023 0.019 0,015 0012 0.010 0.008 0.007 0.006 0.005 25 0.375 0.295 0.233 0.184 0.146 0.116 0092 0.074 0.059 0.047 0038 0 030 0.024 0.020 0.016 0.013 0.010 0.009 0.007 0.006 0.005 0.004 26 0.367 0.281 0220 0,172 0.135 0.106 0.084 0066 0.053 0042 0.033 0026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 27 0.347 0.263 0.207 0.161 0.125 0.098 0.076 0.060 0047 0.037 0.029 0.023 0018 0.014 0011 0000 0.007 0.006 0.005 0.004 0.002 0,002 28 0.333 0 255 0.196 0.150 0.116 0.090 0.00 0.054 0.042 0.033 0.025 0.020 0016 0.012 0010 0.008 0.006 0.005 0.001 0.003 0.002 0.002 20 0.321 0243 0.185 0.141 0.107 0.092 0063 0048 0037 0029 0022 0.017 0014 0011 0.008 0.005 0.005 0.004 0.003 0.002 0.002 0.002 30 0.308 0.231 0.174 0.131 099 0.075 0057 0044 0.033 0.025 0.020 0,015 0,012 0.000 0.007 0005 0004 0.003 0.003 0002 0.002 0.001 40 0208 0.142 0.097 0.067 0.046 0.032 0.022 0015 0011 0.008 0.005 0.004 0.003 0.002 0001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 be Maps . ||1- 33 EXHIBIT 133-2 Presente annuity tnderar Periods 66 7 8% 9 10% 11% 12% 13% 14% 15% 16% 17% 189. 19% 20% 21% 22% 23% 24% 25% 1 0.962 0.952 0943 0.925 1926 0.917 0.909 0.901 0.893 0.885 0 877 0.870 0362 0855 0.847 0.840 0333 0.826 0,820 0813 0.806 0.800 2 1886 1.859 1833 1808 1.783 1.759 1.736 1713 1.690 1.668 1647 1626 1,605 1585 1566 1.547 1528 1.509 1.492 1474 1.457 1.440 3 2.775 2723 2673 2624 2577 2531 2.487 2444 2.402 2361 2322 2283 2.246 2210 2.174 2,140 2106 2074 2042 2011 1981 1952 4 3.630 3.546 2.465 3.387 3312 3240 3.170 3.102 3037 2974 2914 2.855 2.798 2.743 2.690 2639 2.589 2540 2.494 2.448 2.404 2362 5 4452 4329 4212 4.100 2993 3890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2991 2.926 2864 2.803 2.745 2.689 6 5242 5076 4.917 4.767 4.623 4.486 4.355 4 231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3020 2951 7 5002 5786 5582 5389 5.206 5.033 4.868 4712 4564 4423 4288 4.160 4039 3.922 3812 3.706 3.605 3.508 3.416 3 327 3.242 3.161 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4639 4.487 4 344 4.207 4.078 3.954 3837 3.726 3.619 3.518 3.421 3.329 9 7.435 7.108 6.802 6515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 10 8.111 7722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5,019 4.833 4659 4.494 4 339 4.192 4054 3.923 3.799 3,682 2571 11 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5 234 5029 4836 4656 4 486 4.327 4.177 4.035 3902 3.776 3656 12 9.385 8.863 8.384 7943 7.536 7.161 6.814 6.492 6.194 5918 5.660 5.421 5.197 4988 4.793 4.611 4439 4278 4.127 3985 3.851 3.725 13 9.986 9.394 8.852 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5 842 5.583 5.342 5.118 4.910 4715 4533 4.362 4203 4053 3.912 3.780 14 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6,628 6,302 6002 5.724 5.468 5.229 5.008 4 802 4611 4.432 4.265 4.108 3.962 3.a24 15 11.118 10 380 9.712 9.108 3.559 1.061 7.606 7191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4876 4.675 4.489 4.315 4.153 4.001 3.859 16 11.652 10.838 10 105 9.447 8.851 8.313 7.824 7379 6.974 6,604 6.265 5954 5.658 5.405 5.162 4.938 4730 4.536 4357 4.189 4033 3.887 17 12 166 11 274 10.477 9763 9.122 8.544 8.022 7549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910 18 12.659 11690 10.828 10.059 9.372 8.756 8.2017 702 7.250 6840 6.467 6.128 5818 5534 5.273 5033 48124608 1419 4.243 4090 3.928 19 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7366 6938 6.550 6.198 5877 5 584 5.316 5070 4.843 4.635 4.442 4263 4,097 3.942 20 13.590 12.462 11.470 10.594 9.818 9.129 8514 7.963 7.469 7025 6623 6.259 5929 5.628 5353 5 101 4.870 4657 4460 4 279 4 110 3954 21 14.029 12.821 11.764 10.836 10017 9292 8.649 3.075 7.562 7.102 6.687 6312 5973 5665 5.384 5.127 4 891 4.675 4.476 4.292 4.121 2963 22 14.451 12.163 12.042 11051 10 201 9.442 8.772 3.176 7645 7.170 6.743 6.359 6011 5.696 5.410 5.149 4.909 4690 4488 4 302 4.130 3.970 23 14957 13.439 12.703 11.272 10 371 9.580 8.883 8.266 7718 7230 6.792 6 399 6044 5723 5.432 5. 167 4925 4.703 4 499 4311 4.137 3.976 24 15 247 13.799 12.550 11459 10.529 9.707 8.985 8.348 7784 7.283 6835 6 434 6073 5746 5.451 5.182 4937 4.713 4 507 4318 4143 3.981 25 15.622 14.094 12.783 11654 10675 9823 9.077 8.422 7.843 7730 6873 6464 6.097 5.766 5.467 5.195 4948 4721 4514 4323 4 147 3985 26 15983 14 375 13003 11 826 108109.929 9.161 8.488 7.896 7372 6.906 6.491 6.118 5.783 5.480 5 206 4 956 4.728 4520 4.328 4.151 3988 27 16 330 14643 13.211 11.987 10 935 10.027 9.237 8.548 7943 7 409 6935 6.514 6.136 5.798 5.492 5.215 4.964 4734 4.524 4332 41543990 28 16663 14.893 13.406 12.137 11051 10. 116 9.307 B602 7984 7441 6.961 6534 6 152 5810 5 502 5.223 4970 4.739 4528 4 335 4157 3992 29 16984 15.141 1859: 12.278 11.158 10.1989,370 8.650 80227.470 6983 6551 6166 5820 5.510 5 239 4.975 4 743 4531 4337 4159 3.994 30 17.292 15 372 13.265 12.409 11258 10.274 9.427 8694 8055 7 496 7003 6.566 6.177 5.829 5.517 5 235 4,979 4.746 45344339 41602995 40 19.793 17 159 15.046 13.332 11935 10.757 9.779 8951 8 244 7634 7 105 6.642 6233 58715.543 5258 4.997 4 7604544 4347 4.166 2 999