IntemalRate of Return Method=Two Projects Munch N** Crunch Snack Company is considering two...
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IntemalRate of Return MethodTwo Projects
Munch Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $ and could be used to deliver an additional bags of pretzels per year. Each bag of pretzels can be sold for a contribution margin of $ The delivery truck operating expenses, exeluding depreciation, are $ per mile for miles per year. The bagging machine would replace an old bagging machine, and its net investment cost would be $ The new machine would require three fewer hours of direct labor per day. Direct labor is $ per hour. There are operating days in the year. Both the truck and the bagging machine are estimated to have sixyear lives. The minimum rate of return is However, Munch Crunch has funds to invest in only one of the projects.
Present Value of an Annuity of $ at Compound Interest
tableYear
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