Wendell\'s Donut Shoppe is investigating the purchase of a new $39,600 donut-mak

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Wendell's Donut Shoppe is investigating the purchase of a new $39,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,400 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,500 dozen more donuts each year. The company realizes a contribution margin of $2.00 per dozen donuts sold. The new machine would have a six-year useful life Click here to view tables and Exhibit 13B-2, to determine the appropriate discount factor(s) using Required: 1. 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 2. Find the internal rate of return promised by the new machine to the nearest whole percent. Internal Rate of Returnn Choose Numerator: / Choose Denominator: Factor Number of years Internal rate of return Factor 3. In addition to the data given previously, assume that the machine will have a $11,780 salvage value at the end of six years. Under these conditions, compute the internal rate of return to the nearest whole

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Question 2

ASSUMPTIONS AND NOTES

Question No 1 Q1- Ans Annual Total Cashinflows associated with the new machine for capital Budgeting purposes Amount (Dollors) 1 Annual Savings in Part Time          5,400 ( 5400 * 1 Year ) 2 Added Contribution from the expanded Sales          5,000 ( 2500 Dozens * 2 Dollors CPU) Annual Cash Inflows       10,400

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