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Wendell’s Donut Shoppe is investigating the purchase of a new $47,300 donut-making machine. The new machine...
Wendell’s Donut Shoppe is investigating the purchase of a new $47,300 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,300 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,600 dozen more donuts each year. The company realizes a contribution margin of $1.50 per dozen donuts sold. The new machine would have a six-year useful life.
2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answer to 3 decimal places.)
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Wendell’s Donut Shoppe is investigating the purchase of a new $31,300 donut-making machine. The new machine...
Wendell’s Donut Shoppe is investigating the purchase of a new
$31,300 donut-making machine. The new machine would permit the
company to reduce the amount of part-time help needed, at a cost
savings of $5,300 per year. In addition, the new machine would
allow the company to produce one new style of donut, resulting in
the sale of 1,300 dozen more donuts each year. The company realizes
a contribution margin of $3.00 per dozen donuts sold. The new
machine would have...
Wendell’s Donut Shoppe is investigating the purchase of a new $42,700 donut-making machine. The new machine...
Wendell’s Donut Shoppe is investigating the purchase of a new
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company to reduce the amount of part-time help needed, at a cost
savings of $6,400 per year. In addition, the new machine would
allow the company to produce one new style of donut, resulting in
the sale of 2,400 dozen more donuts each year. The company realizes
a contribution margin of $2.00 per dozen donuts sold. The new
machine would have...
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Wendell’s Donut Shoppe is investigating the purchase of a new
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company to reduce the amount of part-time help needed, at a cost
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machine would have...
Exercise 13-3 Internal Rate of Return [LO13-3] Wendell’s Donut Shoppe is investigating the purchase of a...
Exercise 13-3 Internal Rate of Return [LO13-3]
Wendell’s Donut Shoppe is investigating the purchase of a new
$31,300 donut-making machine. The new machine would permit the
company to reduce the amount of part-time help needed, at a cost
savings of $5,300 per year. In addition, the new machine would
allow the company to produce one new style of donut, resulting in
the sale of 1,300 dozen more donuts each year. The company realizes
a contribution margin of $3.00 per dozen...
A Bakery is considering the purchase of a new $18,600 donut making machine. The new machine...
A Bakery is considering 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, to a cost saving of $3,800 per
year. In addition, the new machine would allow the company to
produce a new type of donut, which would replace one existing type,
resulting in the sale of 1,000 donuts with an additional $1.2 in
revenue per donut. The new machine would have a 6-year...
Required information [The following information applies to the questions displayed below.] Wendell's Donut Shoppe is investigating...
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...
Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes.
Henrie's Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost$137,280, including freight and installation. Henrie's has estimated that the new machine would increase the company's cash inflows, net of expenses, by $40,000 per year. The machine would have a five-year useful life and no salvage value.
Required:
1. Compute the machine's internal rate of return to the nearest whole percent.
2. Compute the machine's net present value. Use a...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
Henrie’s Drapery Service is investigating the purchase of a new
machine for cleaning and blocking drapes. The machine would cost
$137,320, including freight and installation. Henrie’s estimated
the new machine would increase the company’s cash inflows, net of
expenses, by $40,000 per year. The machine would have a five-year
useful life and no salvage value.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine
the appropriate discount factor(s) using table.
Required:
1. What is the machine’s internal rate...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
Henrie’s Drapery Service is investigating the purchase of a new
machine for cleaning and blocking drapes. The machine would cost
$102,990, including freight and installation. Henrie’s has
estimated that the new machine would increase the company’s cash
inflows, net of expenses, by $30,000 per year. The machine would
have a five-year useful life and no salvage value.
Required:
1.
Enter the Excel formula inputs and compute the machine’s
internal rate of return.
NPER:
PMT:
PV:
FV:
Internal Rate of...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes....
Henrie’s Drapery Service is investigating the purchase of a new
machine for cleaning and blocking drapes. The machine would cost
$105,510, including freight and installation. Henrie’s estimated
the new machine would increase the company’s cash inflows, net of
expenses, by $30,000 per year. The machine would have a five-year
useful life and no salvage value.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine
the appropriate discount factor(s) using table.
Required:
1. What is the machine’s internal rate...
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