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IntemalRate of Return Method=Two Projects Munch N** Crunch Snack Company is considering two...

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Accounting

IntemalRate of Return Method=Two Projects
Munch N** Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $45,728.10 and could be used to deliver an additional 45,000 bags of pretzels per year. Each bag of pretzels can be sold for a contribution margin of $0.58. The delivery truck operating expenses, exeluding depreciation, are $0,52 per mile for 15,000 miles per year. The bagging machine would replace an old bagging machine, and its net investment cost would be $37,417,50. The new machine would require three fewer hours of direct labor per day. Direct labor is $15 per hour. There are 250 operating days in the year. Both the truck and the bagging machine are estimated to have six-year lives. The minimum rate of return is 19%. However, Munch N' Crunch has funds to invest in only one of the projects.
Present Value of an Annuity of $1 at Compound Interest
\table[[Year,6%,10%,12%,15%,20%
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