Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. wendells donut shoppe is investigating the purchas

Wendells Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new...

80.2K

Verified Solution

Question

Accounting

Wendells 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. Click here to view Exhibit 13B-1 and Exhibit 13B-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 machines internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machines internal rate of return to the nearest whole percent? 4. In addition to the data given previously, assume that the machine will have a $9,125 salvage value at the end of six years. Under these conditions, what is the internal rate of return to the nearest whole percent?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Algebra
1.2K views

Write an algebraic equation to represent the given information. Let x be the first number...

Chemistry
1.2K views

Describe the nature of colloidal precipitate particles. (describe the electric double layer) ,Why do they tend...

Medical Sciences
1.2K views

Please compose an essay comparing shod and unshod walking and running gait. Please consider the following...

Biology
1.2K views

Orm a hypothesis A hypothesis is a proposed explanation for an observation Hypotheses must be...

Physics
1.2K views

10 A small coin is resting on the bottom of a filled with a liquid...

Basic Math
1.2K views

Casey conducted research on the amount of time people spent at the mall and the...

Statistics
1.2K views

If a school district takes a random sample of 69 Math SAT scores and finds...

Calculus
1.2K views

Which of the following functions makes the most sense as a model for the probability...

Algebra
1.2K views

The DIAMETER of a circle is 12 centimeters Enter the area of the circle in...

Accounting
1.2K views

Adams, Corp., is planning to issue $520,000 of 6%, five-year bonds payable to borrow for...

Accounting
1.2K views

On June 1, 20--, a depreciable asset was acquired for $5,400. The asset has an...

Accounting
1.2K views

Suppose the USD/euro exchange rate is 1.25 with a volatility of 15%. A U.S. company...