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Delicious Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business The information Delicious has accumulated regarding the new machine is: E (Click the icon to view the information) Prasant Value of $1 tahle Present Value of Annuity of S1 table Future Value of $1 table Future Value of Annuity of 1 to i Data Table 1 Cost of the machine $90,000 Increased contribution margin $24,000 Life of the machine 8 years Required rate of return 18% Delicious estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers Assume all cash flows occur at year-end except for initial investment amounts. i Requirements 1. Calculate the following for the new machine a. Net present value b. Payback period c. Discounted payback period d. Internal rate of return (using the interpolation method) e. Accrual accounting rate of return based on net initial investment (assume straight-line depreciation) What other factors should Delicious Candy consider in deciding whether to purchase the new machine? 2. Pl 14% R R a ng Present Value of $1 Periods 2% 4% Period 1 0.980 0.962 Period 2 0.961 0.925 Period 3 0.9420889 Period 4 0.924 0.855 Period 5 0.906 0.822 Period 6 0.888 0.790 Period 7 0.871 0.760 Period 8 0.853 0.731 Period 90.837 0.703 Period 10 0.820 0.676 Period 11 0.804 0.650 Period 12 0.788 0.625 Period 13 0.773 0.601 Period 14 0.758 0.577 Period 15 0.743 0.555 Period 16 0.728 0.534 Period 17 0.714 0.513 Period 18 0.700 0.494 Period 19 0.686 0.475 Period 20 0.673 0.456 Period 21 0.660 0.439 Period 22 0 647 0422 Parind 23 624 n AR b 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.294 0278 282 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215 0.199 0.184 170 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0 386 0.350 0.319 0.290 0.263 0239 0.218 0.198 0 180 0.164 0 149 0135 0.123 n 112 12% 0.893 0.797 0.712 0.636 0.567 0.507 0 452 0.404 0.361 0.322 0.287 0.257 0229 0.205 0.183 0.163 0.146 0.130 0 116 0.104 0.093 0.083 0.877 0.769 0.675 0.592 0.519 0.456 0 400 0.351 0 308 0270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0 095 0.083 0.073 0.064 0.056 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0 195 0 168 0.145 0.125 0.108 0.093 0.080 0 069 0.060 0.051 0.044 0.038 18% 0.847 0.718 0 609 0.516 0 437 0370 0.314 0.266 0225 0.191 0.162 0.137 0.116 0 099 0.084 0.071 0.060 0.051 0.043 0037 0.031 0.026 022 20% 0.833 0.694 0.579 0482 0.402 0.335 0279 0.233 0.194 0.162 0.135 0 112 0.093 0.078 0.065 0054 0.045 0.038 0.031 0.026 0.022 0.018 n15 22% 0.820 0.672 0.551 0.451 0.370 0.303 0.249 0.204 0.167 0.137 0.112 0.092 0.075 0.062 0.051 0,042 0.034 0.028 0023 0019 0.015 0.013 ni 0 0 0 0 0 0 0 0 0 0 0 . OOOOOOOOOO d. Present Value of Annuity of $1.00 in Arrears Periods 2% 4% 6% 8% 10% Period 1 0.980 0.962 0.943 0.926 0.909 Period 2 1.942 1.886 1.833 1.783 1.736 Period 3 2.884 2.775 2.673 2577 2.487 Period 4 3.808 3.630 3.465 3.312 3.170 Period 5 4.713 4.452 4.212 3.993 3.791 Period 6 5.601 5.242 4.917 4.623 4.355 Period 7 6.472 6.002 5.582 5.206 4.868 Period 8 7.325 6.733 6.210 5.747 5.335 Period 9 8.162 7.435 6.802 6.247 5.759 Period 10 8.983 8.111 7.360 6.710 6.145 Period 11 9.787 8.760 7.887 7.139 6.495 Period 12 10.575 9.385 8.384 7.536 6.814 Period 13 11.348 9.986 8.853 7.904 7.103 Period 14 12.106 10.563 9.295 8.244 7.367 Period 15 12.849 11.118 9712 8.559 7.606 Period 16 13.578 11.652 10.106 8.851 7.824 Period 17 14.292 12.166 10.477 9.122 8.022 Period 18 14.992 12.659 10.828 9.372 8.201 Period 19 15.678 13.134 11.158 9.604 8.365 Period 20 16.351 13.590 11.470 9.818 8.514 Period 21 17.011 14.029 11.764 10.017 8.649 Period 22 17 658 14.451 12.042 10 201 8.772 Perind 23 18 292 14 857 12 203 10 371 RA83 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 7.562 7.645 7 718 14% 0.877 1.647 2.322 2.914 3.433 3.889 4 288 4.639 4.946 5216 5.453 5.660 5.842 6 002 6.142 6.265 6.373 6.467 6.550 6.623 6.687 6.743 R 702 16% 0.862 1.605 2.246 2.798 3274 3.685 4.039 4.344 4.607 4.833 5.029 5.197 5.342 5.468 5.575 5.668 5.749 5.818 5.877 5.929 5.973 6.011 18% 0.847 1.566 2.174 2.690 3.127 3.498 3.812 4.078 4.303 4.494 4.656 4.793 4.910 5008 5.092 5.162 5.222 5.273 5.316 5.353 5 384 5.410 5432 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3,837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.843 4.870 4.891 4.909 4025 22% 0.820 1.492 2.042 2.494 2.864 3.167 3.416 3.619 3.786 3.923 4.035 4.127 4.203 4.265 4.315 4.357 4.391 4.419 4.442 4.460 4.476 4.488 4 490 14% Compound Amount of $1.00 (The Future Value of $1.00) Periods 2% 4% 6% 8% 10% 12% Period 1 1.020 1.040 1.060 1.080 1.100 1.120 Period 2 1.040 1082 1.124 1.166 1.210 1.254 Period 3 1.061 1.125 1.191 1.260 1.331 1.405 Period 4 1 082 1.170 1.262 1.360 1.464 1.574 Period 5 1.104 1.217 1.338 1.469 1.611 1.762 Period 6 1.126 1.265 1.419 1.587 1.772 1.974 Period 7 1.149 1.316 1.504 1.714 1.949 2.211 Period 8 1.172 1.369 1.594 1.851 2.144 2.476 Period 9 1.195 1.423 1.689 1.999 2.358 2.773 Period 10 1.219 1.480 1.791 2.159 2.594 3.106 Period 11 1.243 1.539 1.898 2.332 2.853 3.479 Period 12 1 268 1.601 2012 2.518 3.138 3.896 Period 13 1.294 1.665 2.133 2.720 3.452 4.363 Period 14 1.319 1.732 2.261 2.937 3.797 4.887 Period 15 1.346 1.801 2.397 3.172 4.177 5.474 Period 16 1.373 1.873 2.540 3.426 4.595 6.130 Period 17 1.400 1.948 2.693 3.700 5,054 6.866 Period 18 1.428 2.026 2.854 3.996 5.560 7 690 Period 19 1.457 2.107 3.026 4.316 6.116 8.613 Period 20 1.486 2.191 3.207 4.661 6.727 9.646 Period 21 1.516 2.279 3.400 5.034 7.400 10.804 Period 22 1.546 2370 3.604 5.437 8.140 12.100 Period 23 1 577 2485 3. 82 5 871 8054 13.552 1.140 1.300 1.482 1.689 1.925 2.195 2.502 2.853 3.252 3.707 4.226 4.818 5.492 6.261 7.138 8.137 9276 10.575 12.056 13.743 15.668 17.861 2 R2 16% 1.160 1.346 1.561 1.811 2.100 2.436 2.826 3.278 3.803 4.411 5.117 5.936 6.886 7.988 9.266 10.748 12.468 14.463 16.777 19.461 22.574 26.186 30 376 18% 1.180 1.392 1.643 1.939 2.288 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 14.129 16.672 19.673 23.214 27 393 32.324 38.142 45 na 20% 1.200 1.440 1.728 2.074 2.488 2.986 3.583 4.300 5.160 6.192 7.430 8.916 10.699 12.839 15 407 18.488 22.186 26.623 31.948 38.338 46 005 55 206 RR 247 22% 1.220 1.488 1.816 2.215 2.703 3.297 4.023 4.908 5.987 7.305 8.912 10.872 13.264 16.182 19.742 24.086 29.384 35 849 43.736 53.358 65.096 79.418 OR ARO Compound Amount of Annuity of $1.00 in Arrears* (Future Value of Annuity) Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Period 2 2.020 2.040 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 Period 3 3.060 3.122 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 Period 4 4.122 4.246 4.375 4.506 4.641 4.779 4.921 5.066 5.215 5.368 Period 5 5.204 5.416 5.637 5.867 6.105 6.353 6.610 6.877 7.154 7.442 Period 6 6.308 6.633 6.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 Period 7 7.434 7.898 8.394 8.923 9.487 10.089 10.730 11.414 12 142 12.916 Period 8 8.583 9.214 9.897 10.637 11.436 12.300 13.233 14.240 15 327 16.499 Period 9 9.755 10.583 11.491 12.488 13.579 14.776 16.085 17 519 19.086 20.799 Period 10 10.950 12.006 13.181 14.487 15.937 17.549 19.337 21.321 23.521 25.959 Period 11 12 169 13.486 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 Period 12 13.412 15.026 16.870 18.977 21.384 24.133 27 271 30 850 34.931 39.581 Period 13 14.680 16.627 18.882 21.495 24.523 28.029 32.089 36.786 42219 48.497 Period 14 15.974 18.292 21.015 24.215 27.975 32.393 37 581 43,672 50.818 59.196 Period 15 17.293 20.024 23.276 27152 31.772 37 280 43.842 51 660 60.965 72.035 Period 16 18.639 21.825 25.673 30.324 35.950 42.753 50.980 60.925 72.939 87.442 105.931 Period 17 20.012 23.698 28 213 33.750 40.545 48.884 59 118 71 673 87.068 Period 18 21.412 25.645 30.906 37.450 45.599 55.750 68.39484.141 103.740 128.117 Period 19 22 841 27 671 33.760 41.446 51.159 63 440 78.969 98.603 123.414 154.740 Period 20 24 297 29.778 36.786 45.762 57.275 72 052 91.025 115.380 146.628 186.688 Period 21 25.783 31.969 39.993 50.423 64 002 81 699 104.768 134.841 174,021 225 026 Period 22 27 299 34.248 43.392 55.457 71.403 92.503 120.436 157,415 206 345 271.031 326 237 Period 23 28 845 36 R18 AR GA6 AN 893 79 543 104 603 138 297 183 601 244 487 22% 1.000 2.220 3.708 5.524 7.740 10.442 13.740 17.762 22.670 28.657 35.962 44.874 55.746 69.010 85.192 104.935 129.020 158.405 194.254 237.989 291.347 356.443 435 AR1

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