Wendell’s Donut Shoppe is investigating the purchase of a new $34,500

Wendell’s Donut Shoppe

Wendell’s Donut Shoppe is investigating the purchase of a new $34,500 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,600 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,600 dozen more donuts each year. The company realizes a contribution margin of $2.00 per dozen donuts sold.

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The new machine would have a six-year useful life. See attached Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using tables. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? Annual savings in part-time help   Added contribution margin from expanded sales   Annual cash inflows Find the internal rate of return promised by the new machine to the nearest whole percent.

Internal Rate of Return           Choose Numerator: / Choose Denominator: = Factor Number of years Internal rate of return   answer needed / answer needed = Factor   answer needed / answer needed =   answer needed answer needed % In addition to the data given previously, assume that the machine will have a $15,645 salvage value at the end of six years. Under these conditions, compute the internal rate of return to the nearest whole percent. (Round your final answer to nearest whole percentage.)