Wendell's Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part- time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six-year useful life. (Ignore income taxes.) irement 2: Excel, calculate the internal rate of return promised by the new machine. (Round answer to two decimal places. Omit the "%" sign in your response.) rnal rate of return 3.72 %
Wendell's Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part- time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six-year useful life. (Ignore income taxes.) irement 2: Excel, calculate the internal rate of return promised by the new machine. (Round answer to two decimal places. Omit the "%" sign in your response.) rnal rate of return 3.72 %
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
Problem 1PS
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S1.
Transcribed Image Text:Requirement 3:
In addition to the data given previously, assume that the machine will have a $4,125
salvage value at the end of six years. Under these conditions, compute the internal rate
of return. (Round your answer to two decimal places. Omit the "%" sign in your
response.)
Internal rate of return
%
![!
Required information
[The following information applies to the questions displayed below.]
Wendell's Donut Shoppe is investigating the purchase of a new $18,600 donut-making
machine. The new machine would permit the company to reduce the amount of part-
time help needed, at a cost savings of $3,800 per year. In addition, the new machine
would allow the company to produce one new style of donut, resulting in the sale of
1,000 dozen more donuts each year. The company realizes a contribution margin of
$1.20 per dozen donuts sold. The new machine would have a six-year useful life. (Ignore
income taxes.)
Requirement 2:
Using Excel, calculate the internal rate of return promised by the new machine. (Round
your answer to two decimal places. Omit the "%" sign in your response.)
3.72 %
Internal rate of return](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F41e793dc-c741-4e94-bcd3-a298f99ad349%2F89030f39-857f-4019-ac72-b6466fcca43c%2Fdxrmf9wu_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Wendell's Donut Shoppe is investigating the purchase of a new $18,600 donut-making
machine. The new machine would permit the company to reduce the amount of part-
time help needed, at a cost savings of $3,800 per year. In addition, the new machine
would allow the company to produce one new style of donut, resulting in the sale of
1,000 dozen more donuts each year. The company realizes a contribution margin of
$1.20 per dozen donuts sold. The new machine would have a six-year useful life. (Ignore
income taxes.)
Requirement 2:
Using Excel, calculate the internal rate of return promised by the new machine. (Round
your answer to two decimal places. Omit the "%" sign in your response.)
3.72 %
Internal rate of return
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