Corn Doggy, Inc. produces and sells corn dogs. The com dogs are dipped by hand. Austin Beagle,
Question:
Corn Doggy, Inc. produces and sells corn dogs. The com dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $215,000. In addition, Austin estimates that the new machine will increase the company's annual net cash inflows by 33,000. The machine will have a 12-year useful life and no salvage value.
a). Calculate the cash payback period.
b). Calculate the machine's internal rate of return.
c). Calculate the machine's net present value using a discount rate of 8%.
d). Calculate the machine's annual rate of return. (Hint: You will need to calculate Net Income from the Net Annual Cash Flow amount that is given in the problem).