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Woodfire Pizzeria is considering acquiring a new pizza oven. The pizza oven would cost $151,640, including installation and shippping. Woodfire estimated the new pizza oven
Woodfire Pizzeria is considering acquiring a new pizza oven. The pizza oven would cost $151,640, including installation and shippping. Woodfire estimated the new pizza oven would increase the company's cash inflows, net of expenses, by $40,000 per year. The pizza oven would have a five-year useful life and no salvage value. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. What is the pizza oven's internal rate of return? (Round your final answer to the nearest whole percentage.) 2. Using a discount rate of 10%, what is the pizza oven's net present value? 3. Suppose the new pizza oven would increase the company's annual cash inflows, net of expenses, by only $36,000 per year. Under these conditions, what is the internal rate of return? (Round your final answer to the nearest whole percentage.) > Answer is complete but not entirely correct. 1. 10 % 2. Internal rate of return Net present value Internal rate of return 151,640 X 3. 6 %
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