Corn Doggy, Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make he corn dogs. Austin has shopped for machines and found that the machine he wants will cost $160,000. In addition, Austin estimates that the new machine will increase the company's annual net cash inflows by $53,000. The machine will have a 16-year useful ife and no salvage value. Instructions A. Identify the following amounts: 1. Initial Cash Outlay 2. 3. Differential Annual Operating Cash Flow Differential Annual Net Income 3. Compute the following: 1. Cash Payback Period 2. 3. 4. Return on Investment (ROI) Net Present Value, assuming the cost of capital is 10% Internal Rate of Return Ad ye: % %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Corn Doggy, Inc. produces and sells corn dogs. The corn dogs are dipped by hand.
Austin Beagle, production manager, is considering purchasing a machine that will make
the corn dogs. Austin has shopped for machines and found that the machine he wants
will cost $160,000. In addition, Austin estimates that the new machine will increase the
company's annual net cash inflows by $53,000. The machine will have a 16-year useful
life and no salvage value.
Instructions
A. Identify the following amounts:
1. Initial Cash Outlay
2.
3. Differential Annual Net Income
B. Compute the following:
11.
Differential Annual Operating Cash Flow
2.
3.
4.
Cash Payback Period
Return on Investment (ROI)
Net Present Value, assuming the cost of capital is 10%
Internal Rate of Return
years
%
%
Transcribed Image Text:Corn Doggy, Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $160,000. In addition, Austin estimates that the new machine will increase the company's annual net cash inflows by $53,000. The machine will have a 16-year useful life and no salvage value. Instructions A. Identify the following amounts: 1. Initial Cash Outlay 2. 3. Differential Annual Net Income B. Compute the following: 11. Differential Annual Operating Cash Flow 2. 3. 4. Cash Payback Period Return on Investment (ROI) Net Present Value, assuming the cost of capital is 10% Internal Rate of Return years % %
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