Wendell's Donut Shoppe is investigating the purchase of a new $18,600 donut making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 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? (Round your final answer to the nearest whole dollar amount.) 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 $9.125 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. Internal rate of return 4. Internal rate of return % % EXHIBIT 128-1 Present Value of 51: Periods SX 6% 7 8% 10% 12 3 sex 15% 165 17 18% 195 201 21 24 25 1 0962.0952 0943 0935 0926 0917 0909 0901 0.893 085 0877 08700862 0855 084 08400833 0826 0820 081 08060 800 2 0925 0907 09900173 08570842 0826 0812 0.797 0783 0769 0756 073 0731 0.7180.7060694 0683 0672 0661 0690 0640 3 0889 0864 0840 0.816 0.794 072 0751 0.731 07120693 0675 0658 0641 0624 0609 0583 0579 0564 0551 057 0524 052 4 0855 0823 0792 0763 0735 0708 0683 0659 0636 061) 0592 0572 0552 0534 05160499 0482 04670451 0437 0423 0.450 5 0822 0784 0747 0713 0681 0650 0621 0593056/ 0543 0519 0497 0.476 0456 0437 0.419 0402 0386 03700355 0341 0328 6 0790 0746 0705 0666 06300596 0564 0535 0507 0480 0456 0432 04100390 03700352 0335 03190303 0289 0275 0.262 2 0760 0711 066 0623 0583 0547 05130487 0452 0425 0400 0376 0354 0333 0314 0 296 0279 0263 0.249 0235 022 0210 R 0731 06770627 0582 05400502 0467 0434 0404 035 0351 0327 03050285 0 266 0249 0233 028 0204 0191 01790168 9 07030645 0592 0544 05000460 0424 0.391 0361 0333 03080284 0263 0243 0225 0209 0194 0180 01670155 014 034 30 0676 0614 0558 0508 0.463 0422 0386 0352 0322 0295 0270 0242 0227 0208 0191 0176 0.162 01490137 01260116 0907 11 0 650 0585 () 527 0 45 0 429 0986 030 0,287 021 022 021 0 195 0128 0 62 0148 0135 0123 0 12 03 (1 44 45 46 12 0625 0552 0497 0.444 0.397 0356 0319 0.286 0257 0231 0208 0187 0168 0152 0137 0124 01120102 0.002 0083 0076 0.069 13 0 601 0530 0469 04150368 0326 0.290 0.258 0.229 0.2040182 0163 0145 0130 0116 0904 0093 0084 005 0068 0061 0055 14 0572 0505 0442 0388 0 0 0.299 0263 0232 02050181 040 011 0125 01 0099 0088 0078 006900620055 0049 0044 15 0555 0461 0417 0362 0315 0275 0229 0209 010 0160 01001230108 0095 0084 0074 0065 0057 0051 0045 0040 0035 16 0534 0458 0394 0339 0292 0252 021 01880163 0410123 09070093 0081 0.0710052 0054 0047 0042 0036 0032 0028 12 05130436 0371 03170270 0231 0988 01700146 0.125 0108 0093 OORD 0069 00600052 0045 0039 0034 0030 0026 0023 18 0.494 04150350 02960250 0212 01800153 010 0111 009500810069 0059 0051 0044 0038 0032 0028 0024 0.021 0018 19 0475 0396 0331 0272 0232 0194 0164 0138 0115 0098 008 0.07000600051 004 0037 0031 0027 0023 0020, 0010014 20 0455 0377 0312 0258 02150178 0149 0124 04 0087 0073 0061 0051 0043 0037 0031 0026 0022 0019 0.01 000012 21 0439 0359 0241 0242 0199 0164 01350112 0093 0077 0064 0053 0044 0037 0031 0026 0022 005 006 0013 con 0009 22 0422 0342 0278 0226 0184 01500123 0501 0083 0068 0056 0046 0038 0032 0026 0022 0018 0015 003 001 0009 0007 23 0.406 0.326 0262 021101700138 0112 0091 0074 0060 00490040 0033 0027 0022 0.018 0015 0012 000 0009 0007 0006 24 0390 0310 0241 0197 0158 0126 002 OOK 0006 0053 004 006 0028 0023 0019 0015 000 0010 0008 0007 0005, 0005 25 0.375 0295 02 0184 016 0116 0092 0074 0059 0047 00 00300024 0020 00160011 0010 0009 0007 0006 0005 0000 26 0.361 0281 0220.0172 01350106 0084 0066 005 0042 003 002600210017 OM 0010009 0.007 0006 0005 0004 0003 27 03470268 0.207 0161 0125 009 00760060 0047 003 0029 0023 00 00 00 0009 0007 0006 0005 0004 0.003 0002 0333 0255 0196 0150 01160090 00690054 00120033 0076 0020 00 0.00 0010 0000 0000 0005 0.0040003 0002 0002 29 0321 0243 015 0141 0307 002 006 0048 007 0029 0,022 0012 001 00110008 0006 0005 0004 0000 0002 0.002 0002 30 0308 0231 0110 0010099 0025 0057 004 0033 0026 0020 0015 0012 0009 0007 0005 0004 0.003 0003 0002 0.002 0001 40 020 0140097 0062 0046 0032 0022 0,015 0011 000 000 000 000 000 0001 0001 0001 0000 0000 0000 0000 0000 EXHIBIT 129-2 Present Value of an Annuity of $1 in Arrears, 103 Periods 4 5% 8 9 111 123 13% 15% 1 09620952 093 0935 0.926 0917 0909 0901 0.893 088 0877 08700862 0855 08470840 0833 0826 0820 087 086 0800 19 21 22 23 24 25 2 1886 1859 1833 1808 1783 1759 1736 1713 1690 1668 1647 1626 1605 1585 566 15471528 1509 1492 147 1457 1410 3 2.775 2723 2673 2624 2577 2531 2487 2444 2402 2361 2322 2283 2246 2210 2174 2140 2106 2074 2042 2011 1981 1952 4 3630 3546 3465 3.387 3312 3200 3170 3102 3037 2974 2954 2855 2198 2743 2690 2639 2589 2540 2494 2468 2604 22 5 4.452 43294212 4.100 3993 3890 3791 3696 3.605 3517 3433 3352 3274 3199 31273058 2991 2925 2864 203 2765 2689 6 5.242 5076 4977 4767 4622 4486 4355 4231 4111 3998 3889 3.784 3685 3589 3498 3.410 3326 3245 3167 3092 3020 2951 7 6.002 5786 5582 5389 5.205 5033 468 470 4564 423 4288 4160 4039 3922 3812 37063605 3.508 3.416 3327 32423161 6733 6463 620 5971 5747 5.535 5135 5145 4968 4.799 4639 487 4344 4 207 4078 954 3837372636193518 3421 3329 9 7435 2108 6 802 6515 5247 5.995 5759 5537 5320 532 4966 472 4607 4.451 4303 4163 4031 3905 3786 36733566 3.063 10 R111 7722 7350 7024 6710 5.418 6145 5889 5650 5426 5216 5019 4833 4659 4494 43394192 4054 323 379 3682 3571 11 8.760 8.306 7887 7499 739 6.805 6495 6207 5938 5675453 5234 5029 48364656 4486 4327 417 4035 3902 376 1656 12 9,385 8863 8.384 7943 7536 7161 6814 6 492 6194 5.918 5660 5.421 5197 1988 47934611 4439 4278 427 2985 3851 3725 13 99869394 8.853 8.358 7904 74872103 67506424 6122 584255R3 5342 5718 4.910 4715 4533 4362 4203 4052 29123780 14 10.563 989992958745 824427867367 6982 628 6302 61X12 5724 5468 5229 5.000 4802 4611 4432 4265 48 1962 12% 15 11118 10 380 9712 9.108 8559 80617606 7191 681 6462 62 547 5575 5324 5092 476 46754489 415 415340013859 16 11652 10 838 90106 9467 8851 8317824 7379 594 6604 6 265 954 5.668 5.405 512 493 4704536 4357 439 4033 12 12166 11274 10477 9763 9122 8544 R022 7549 7120729 6373 607 5719 5475 5222 4990 47754574331 4219 40593910 18 12659 11690 10828 100599372 756 201 702 72506810 6462 6128 5818 5534 52 5033 48124608 441424340803928 19 13.134 2085 11158 1033696048950 365 7819 766 68 55506198 5877 554 531 5070 480 4635 442 42604097 M2 20 13590 12.462 114700594981891298554 1963 7469 1025 6623 6259 5.929 5.628 5153 51014870 4657 4460427141103954 21 14.029 128211176483510017 9.292 8649 075 752 7602 067 532 593 5665 5384 527 4891 4675 476 4292472 1963 14451 11611201211061 30201902 872 2175 7645 7170 6743635901 5.0 54 549 4909 46904488 4302 400 1970 23 14.857 13.489 12 303 11272 10371 950 88838206 2718 2230 6292 399 04572 542 5167 4925 4707 4.499 43114U 1976 24 15.241 1799 12.550 11469905299707 985 34 28 835 644 607 546 5.451 52 4937 4713 4507 4433581 622 094 12783 1654 10625 923 907 42278437.0036464 09 5766 546751959 4721 451 432 4718 26 15982 1:75 003 112690810 99299361 8488 2896 2372 69066491 6Y5763505 2004956 4728 4520 4328 41513888 27 16 330 16431211119871035 10027 927 863 43 7400 6.935 650 636 57 5492 515 964 4734 574 412 41543990 28 15663 1488 1340171105110116 9207860270169616534 6152 5810 5502 522349704239 528 425 415292 29 16.984 151413591 278 11.158 10198 9370 650 8022 7470 6383 6551 6166 5800 5510 5229 4975 474531 34159 1594 30 17.292 15372 138 409 1125H 1077 9428691 8055 7496 2001 55666175829 551 5235 499 4746 254 43196160399 40 19.793 119 15 06 11975 10.757 979 BASE 24 7634 705 5612 623 587 558 5258 499747604544 43414156 1999