Wendell's Donut Shoppe is investigating the purchase of a new $34,600 donut making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,500 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 $1.60 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibigha B-1 Exhibit 14B-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 Whet 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 $13,755 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 flows 2 Discount factor 3 Internal rate of return 4 Internal rate of return 96 BIBIT 148-1 Present Value of the Periods 2 3 4 5 7 4 5% 6% 7% 89 94 30% 11% 124 135 15% 16% 17 189 19% 2013 27 0.952 0.952 0943 0935 0926 0917 09090901 0.893 0.855 0.8770870 0.862 0.855 0.347084008330826 0820080308060.000 0.925 0907 0890 0.873 0857 0.542 0.826 0.812 0797 0.783 0789 07560743 0731 0718 0706 0.694 0683 0672 0.661 0650 060 0.889 0.864 0.840 0816 0.794 0.772 0.751 0.731 0712 0.593 0675 0.6580641 0624 0.609 0.593 0.579 0564 0551 0537 0.524050 0.855 0.823 0792 0.763 0735 0.708 0,083 0659 0636 06130592 0572 0552 0534 0516 0.499 0482 0467 0451 0.437 0422 200 0.822 0784 0.747 0.713 06810650 0.621 0.593 0.567 0.543 0.519 0497 0.4760456 0.437 04190.402 0.386 03700355 0.341 0.790 0.746 0.705 0.666 0.630 0596 0564 05350507 0.400.456 0432 0.41 0.390 0.370 0352 0.335 0319 0.303 0289 0275022 0.750 07 0.665 0.623 0.583 0547 0513 0.482 0652 0425 0400 0.375 0.354 0.333 0314 0.296 0279 0260 0.749 0235 0222 0.210 0731 0.677 0627 0.582 0540 0502 0.467 0.434 0.404 0.376 0.351 0327 03050285 0.266 0.249 022 0218 02040191 0179 0.550 0.7030645 0.592 0544 0.500 0.460 0.424 0.391 0 361 0.333 0.308 0234 0263 0243 0225 0.209 0.194 0100 0.167 0.155 014 004 0676 0614 0.558 0508 0.463 0.422 0.386 0.352 0322 0295 02700247 0.227 0.208 0.191 0176 0.162 019 087 0126 016 0650 0585 0.527 0.475 0.429 0388 03500307 0287 0201 0237 0.215 01950178 0162 0.148 0.035 0.123 0112 0.103 0094 0.080 0.625 0.557 0.497 0.444 0.397 0.356 0319 0.286 0257 0231 0208 0137 0168 0.152 0187 0124 0.112 0902 0.092 008300760060 0601 0530 0.469 0.4150369 0326 0290 0.258 0229 0.204 0182 03 04450130 0.116 0104 0.093 0.034 0.075 0.068 0.061 0055 0577 0.505 0.4420388 0340 0299 0263 0.232 0205 0.181 01600141 0125 0.111 009900830078 0.069 0062 0055 0049 034 0555 0481 0.417 0.362 0.315 0275 0.239 0209 0183 0.16001400123 0108 0.095 0.084 00740065 0.057 0.051 0.045 0000 0.005 0534 0.458 0.394 0339 0292 0.252 0.218 0.183 0163 0.141 0123 0107 0.093 0.001 0.071 0062 0054 0047 004200360012 0.02 0513 0.436 0371 0317 0.270 0231 0.198 0.170 0.166 0.125 0108 0.092 0.000 0.009 0.060 0052 0.045 0039 0034 0.030 002600 0.4940/415 0.350 0.296 0.250 0212 0.190 0153 0.130 0111 0.095 00010069 0.059 0.05100440038 0.0320028 0.024 0.021 00 0475 0.396 0331 0277 0.232 0194 0.164 0138 0.116 00960033 0.00 0.000 0.051 0043 0.037 0.031 0.027 0.023 0.020 000 00N 0.456 037 0.3120 258 0.215 0178 0149 01240104 0.0870073 0061005100430037 0.001 0025 0.022 0.019 0.01600110012 0.4390359 0.294 0242 0199 0164 0.135 0112 0.093 0077 0.054 0.053 0044 0.037003100260022 0.09800150013 010009 0.422 0342 0.278 02260184 01500123 0101 0083 0.068 0056 0046 0038 0.032 0026 0022 0018 0.015 000 001 0000007 0.406 0326 0262 0211 0170 0133 0 112 0091 0.074 0.060 0.049 0.000 0.033 0027 0.022 0.01 0.015 00120010000900010000 0.390 0310 0247 0197 0.158 0126 0102 0082 0.066 0.053 0043 0.035 0.028 0.022 0.019 0,015 000 0.00 0.00 0.007 00060005 0.375 0.295 0233 0154 0146 0.116 0.092 0074 0.059 0047 002 0.030 0.024 0.020 0016 0.03 0.010 0.009.0002 0.000 0.00 0.004 0361 0281 0220 0172 0.135 0106 0004 0.066 0.053 0042 0.033 0.025 0.021 0.01 0.054 0011 0.009 0.007 0.008 0.0050004 0.003 0.347 0268 0.207 0.161 0125 0.098 0.025 0.060 0.047 0.037 0.029 0.023 0.01 0.014 0.01 0.009 0.007 0006 0.005 0004 0.00 0.002 0.333 0255 0196 0150 0.116 0.090 0.069 0.054 0042 0033 0026 0.020 001 0.012 0010 0.008 0.006 0.005 0.004 0000 0000 0002 0221 0.243 0185 0141 0107 00B2 0063 004 0037 0.029 0022 0.01 0.01 0:01 0.008 0.006 00050004 0000 0000 0000 0000 03080231 0.174 021 0 099 0.075 0057 0044 003 0026002000150012 0.003 0.007 0005 0.001000000000200020 0208 012 0097 0067 0.046 0.032 0022 0.01 0.01 0.008 0.005 0004 0003 0.002 0.001 0.001 0001 0.000 0.000 0.000 0.000 0.000 16 17 13 19 20 21 22 22 24 28 29 30 40 EXHIBIT 140-2 Present Vale of an Annulty of $1 in Arrears: Periods 19 2 4 5 6 2 9 10 11 12 3.300 15 5% os 94 109 115 135 149 15% 108 1 189 20% 211 0.962 0.9520943 0935 0.926 0917 0.909 0.901 0391 0.885 0877 0.970 0362 0855 08470840 0813 0826 08200013 0.805 0800 LAB 1850 183 1 BOB 1783 1750 1713 1690 1658 1647 1626 1605 158515661547 1528 1509 1492 1474 1457 400 2775 2722 2673 2.624 2577 2531 2487 2444 2402 2361 23222283 2246 2210 2114 2140 2106 2074 2042 2011 201 3630 3.546 3.465 3337 3.312 3.240 3.170 2102 3037 2.974 2942555 2798 2743 2.650 2639 2589 2540 2494 2448 2.404 2362 4:452 4329 4.212 4100 3.993 3.890 3.791 3696 3.605 3.517 3433 3352 3274 3199 3127 3050 2.991 2926 2064 2.803 2.745 2009 5242 5075 4.917 4767 4623 4.486 4355 4231 4111 2990 339937143605 3509 3.490 3.410 3326 32451167 3.092 1020 2955 0.002 5706 5582 5.399 5206 5033 468 4712 4564 4423 42804004039 3.922 3812 370636053508 3.416 3327 3221167 6 483 6210 5.971 5747 5.535 53355146 4.968 479946394487 43444207 4070 3.954 3.837 3726 3619 3.51834211329 7435 7100 5.802 6.515 6.247 5.995 575955375.328 5.02 49464772 4602 4.45043034163 4.031 3.905 376 367 3566246 2722 7360 7024 6210 6.410 6145 5889 5650 5.426 5216 5.099 4833 4659 4494 43394192 4054 3.9233 799 3682 357 8760 7887 7499 7139 6.805 6.495 6207 5.938 5687 5.453 5.234 5029 40364656 4.486 43274177 40353.902 3.776 1656 9,385 8863 8384 7943 7538 7161 6.614 6.492 6194 5918 5.660 5.421 5197 4988 4793 4.011 44394278 4.122 3905 35 2725 9.986 9394 8.853 B 358 7904 7487 7103 6.750 6.4246122 5,8425583 5 342 5110 4910 4715 45304362 4203 4053 392 3790 10583 9.899 9.295 5745 8.244 7.786 736769026620 6.302 8002 5724 5.468 5.229 5008 4802 4.611 402 4 265 4309 3962304 T18 10.380 9712 9108 8 559 3061 7606 2190 6.811 5.462 6542 5347 5575 5324 5092 4.876 467544894715 4153 4001 3.89 1.852 10838101069417 8.851 8313 7824 7379 69746604 6 265 954 5668 5.405 5162 4 938 47304536 4357 4199 40331 12166 1127410477 9.763 9122 3544 802275497120 67296.373 6.047 5.749 5.475 5222 4.990 4775 4575 4.391 4219 40593910 12.659 11690 10.8281005993723756 8 201 7702 7250884064076128 5 534 5.2735033 48124608 419 424340803928 134 1208511158 10336 95048950 8.365 78397366 690 655061985877 5584 5.316 5070 443 4.635 4442 4.263 40573902 13.560 12.662 40 10.5949.810 9129 8.51479632469 7025 6.0236259 5929 56285.153 5101 4870 4.657446042794.110 102912021 11764 10.836 1000 9.292 B6498.075 7562 7102 6687 6312 5973 5665 5384 5.127 4.891 4025 4470 4.292 4121 14.451 13163 2042 11061 10.2019.442 87728176 7545 2170 6716.358 6011 5696 5.410 5549 4.909 4.690 4483 4302 400 2970 14,857 1489 12.303 11272 10371 9580 3.933 8266 2710 2230 6792 6.399 6044 572354025167 4925 4703 4499 4311 15 241 6.799 12.550 1146910529 9707 8966 348 2784 7283 610564346.0735146 5.451 5132 49a7473 4507431840 2161 15.622 012783 1654 10675 9123 90778422784371306873 6.464 6.097 5.766 5.467 519549484721 4514 2985 1963 143753003 11826 10.810 9929 5,161 8488 2896 7372 6.906 6.4916118 573 5.480 5.2064956 4728 4520 4320 4151 2958 16 330 14643 121111987 10.935 10.027 9 227 8.548 7943 74096 935 6.514 6136 5.798 5.492 5.2154964 4734 4524 43324154 16663 1398 13.406 207 71051 10.116 9307 8.602 7934 7441 6.9616534 0152 5.810 5502 52234970 4739452843354153 3.93 16.584 15.54 13.591 12.278 11158 10.158 9370 8.650 8.022 7470 6.983 6551 6156 5.820 5510 5229 4975 4743 1129215372 13.285 12409 11250102149.427 368055 74967001 6566 6.12 45014331153 5.829 SETT 5235 4.979474645344379 4550 3955 1971 17155 15006 13.332 11925 10757 9,779 951 8244 7634 2105 6.642 6233 871 5548 5.25849974200 4544 437 40 1999 12 th 20 21 22 24 25 20 27 28 24 30 40
