Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information

Amazing

has accumulated regarding the new machine is:

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(Click

the icon to view the information.)

Present Value of $1 table

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Present Value of Annuity of $1 table

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Future Value of $1 table

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Future Value of Annuity of $1 table

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Read the

requirements

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.

Requirement 1. Calculate the following for the new machine:

a. Net present value (NPV) (Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.)

The net present value is

$15,180

.

b. Payback period (Round your answer to two decimal places.)

The payback period in years is

5.00

.

c. Discounted payback period (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.)

The discounted payback period in years is

7.28

.

d. Internal rate of return (Round the rate to two decimal places, X.XX%.)

The internal rate of return (IRR) is

13.70

%.

e. Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.)

Based on net initial investment, the accrual accounting rate of return (AARR) is

%.

Cost of the machine	$100,000
Increased contribution margin	$20,000
Life of the machine	9 years
Required rate of return	10%

Amazing

estimates they will be able to produce more candy using the second machine and thus increase their annual contribution margin. They also estimate there will be a small disposal value of the machine but the cost of removal will offset that value. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts.