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Wendell's Donut Shoppe is investigating the purchase of a new $ 3 7 , 7 0 0 donut - making machine. The new machine would
Wendell's Donut Shoppe is investigating the purchase of a new $ donutmaking machine. The new machine would permit the company to reduce the amount of parttime help needed, at a cost savings of $ per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of dozen more donuts each year. The company realizes a contribution margin of $ per dozen donuts sold. The new machine would have a sixyear useful life.
Required:
What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?
What is the new machine's internal rate of return? Note: Round your final answer to the nearest whole percentage.
In addition to the data given previously, assume that the machine will have a $ salvage value at the end of six years. Under these conditions, what is the internal rate of return? Note: Round your final answer to the nearest whole percentage.
table Annual cash inflows,, Internal rate of return,,
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