PLEASE GIVE ME THE ANSWER IN FORMAT THAT YOU SEE HERE IN QUESTION. I WROTE 12345
ID: 2418269 • Letter: P
Question
PLEASE GIVE ME THE ANSWER IN FORMAT THAT YOU SEE HERE IN QUESTION. I WROTE 123456 IN NUMERIC BOXES. THANK YOU!
Wendell’s Donut Shoppe is investigating the purchase of a new $34,500 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,600 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,600 dozen more donuts each year. The company realizes a contribution margin of $2.00 per dozen donuts sold. The new machine would have a six-year useful life.
What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?
2 Find the internal rate of return promised by the new machine to the nearest whole percent.
PLEASE Choose Numerator: Annual Cash Inflow or Annual cash Outlfow or Investment Required
PLEASE Choose Denominator: Annual Cash Inflow or Annual cash Outlfow or Investment Required
3 In addition to the data given previously, assume that the machine will have a $16,000 salvage value at the end of six years. Under these conditions, compute the internal rate of return to the nearest whole percent.(Round your final answer to nearest whole percentage.)
What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?
Annual savings in part-time help Added contribution margin from expanded sales Annual cash inflows 123,456 123,456 246,912Explanation / Answer
IRR = Lowest Discount Rate + [NPV at Lower rate * (Higher Rate - Lower Rate) / (NPV at Lower Rate - NPV at Higher Rate)]
IRR = Lowest Discount Rate + [NPV at Lower rate * (Higher Rate - Lower Rate) / (NPV at Lower Rate - NPV at Higher Rate)]
Answer 1 cost of machine 34500 Annual cash flow saving in cost 5600 0 contribution from additional sale 3200 0 total cash flow 8800 answer 2 Year cash flow PV@10% present value of cash flow Year cash flow PV@15% present value of cash flow 1 8800 0.909090909 8000 1 8800 0.87 7652.174 2 8800 0.826446281 7272.727 2 8800 0.756 6654.064 3 8800 0.751314801 6611.57 3 8800 0.658 5786.143 4 8800 0.683013455 6010.518 4 8800 0.572 5031.429 5 8800 0.620921323 5464.108 5 8800 0.497 4375.155 6 8800 0.56447393 4967.371 6 8800 0.432 3804.483 sum of present value of cash flow 38326.29 sum of present value of cash flow 33303.45 cost of the project 34500 cost of the project 34500 NPV 3826.294 NPV -1196.55IRR = Lowest Discount Rate + [NPV at Lower rate * (Higher Rate - Lower Rate) / (NPV at Lower Rate - NPV at Higher Rate)]
IRR 10%+[3826.294*(15-10)/3836.294-(1196.55)] 13.81% answer 3 Year cash flow PV@10% present value of cash flow Year cash flow PV @20% present value of cash flow 1 8800 0.909090909 8000 1 8800 0.833 7333.333 2 8800 0.826446281 7272.727 2 8800 0.694 6111.111 3 8800 0.751314801 6611.57 3 8800 0.579 5092.593 4 8800 0.683013455 6010.518 4 8800 0.482 4243.827 5 8800 0.620921323 5464.108 5 8800 0.402 3536.523 6 8800 0.56447393 4967.371 6 8800 0.335 2947.102 6 16000 0.5644 9030.4 6 16000 0.279 4465.306 sum of present value of cash flow 47356.69 sum of present value of cash flow 33729.8 cost of the project 34500 cost of the project 34500 NPV 12856.69 NPV -770.205IRR = Lowest Discount Rate + [NPV at Lower rate * (Higher Rate - Lower Rate) / (NPV at Lower Rate - NPV at Higher Rate)]
IRR 10%+[12856.69*(20-10)/12856.69-(770.205)] 19.62%Related Questions
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