A new machine costing $750,000 will yield cash savings of $250,000 each year for four years. In

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Question:

A new machine costing $750,000 will yield cash savings of $250,000 each year for four years. In addition, it is anticipated that the new machine will increase productivity and that the company will experience an increase in contribution margin as a result. What annual dollar inflow from increased contribution margin would the company have to experience to make the machine an acceptable investment if the minimum desired rate of return is 18%?

a. $28,810.41

b. $62,500.00

c. $77,500.00

d. $39,687.