Wendell's Donut Shoppe is Investigating the purchase of an $33,700 donut-making machine with a slx-year...
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Wendell's Donut Shoppe is Investigating the purchase of an $33,700 donut-making machine with a slx-year useful life. The new machine would reduce labor costs by $5,500 per year. In addition, it would allow the company to produce one new style of donut, resulting in the sale of 2,200 dozen more donuts each year. The company realizes a contribution margin of $2.00 per dozen donuts sold. Click here to view and to determine the approprlate discount factor(s) using tables. Required: 1. What are the new machine's total annual cash Inflows? 2. What discount factor should be used to compute the new machine's Internal rate of return? Note: Round your answer to 3 decimal places. 3. What is the new machine's Internal rate of return? Note: Round your flinal answer to the nearest whole percentage. 4. In addition to the data glven previously, assume the machine will have a $13,860 salvage value at the end of slx 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.) Note: Round your final answer to the nearest whole percentage
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