Exercise 12-3 (Algo) Internal Rate of Return [LO12-3] Wendell's Donut Shoppe is investigating the purchase of a new $33,700 donut-making machine. The new machine would permit company to reduce the amount of part-time help needed, at a cost savings of $5,500 per year. In addition, the new machine woul 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. The new machine would have a six-year useful life. Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine's internal rate of return? (Round your answers to 3 decimal

Exercise 12-3 (Algo) Internal Rate of Return [LO12-3] Wendell's Donut Shoppe is investigating the purchase of a new $33,700 donut-making machine. The new machine would permit company to reduce the amount of part-time help needed, at a cost savings of $5,500 per year. In addition, the new machine woul 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. The new machine would have a six-year useful life. Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine's internal rate of return? (Round your answers to 3 decimal

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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