Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Woodfire Pizzeria is considering acquiring a new pizza oven. The pizza oven would cost $137,320, including installation and shippping. Woodfire estimated the new pizza
Woodfire Pizzeria is considering acquiring a new pizza oven. The pizza oven would cost $137,320, 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 14%, 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 $38,090 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. Internal rate of Net present value 1. return 2. Internal rate of 3. return 4%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started