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Problem 12-22 Net Present Value Analysis [LO12-2] The Sweetwater Candy Company would like to buy a new machine that would automatically dip chocolates. The dipping

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Problem 12-22 Net Present Value Analysis [LO12-2] The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dipping operation currently is done largely by hand. The machine the company is considering costs $180,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $9,900, including installation. After five years, the machine could be sold for $5,000. The company estimates that the cost to operate the machine will be $7,900 per year. The present method of dipping chocolates costs $39,000 per year. In addition to reducing costs, the new machine will increase production by 6,000 boxes of chocolates per year. The company realizes a contribution margin of $130 per box. A 15% rate of return is required on all investments. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables Required: 1. What are the annual net cash inflows that will be provided by the new dipping machine? 2. Compute the new machine's net present value. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What are the annual net cash inflows that will be provided by the new dipping machine? EXHIBIT 120-1 Present Value of $1 24 % 25% 20 % 21 % 22% 23% 19% 18% 15% 16 % 17% 14% 10% 11% 12% 13 % 8% 9% Periods 4 % 0962 0952 0943 0935 0 926 0917 0909 0901 0893 0885 0877 0870 0862 0855 0847 0840 0833 0826 0820 0813 0806 0800 0925 0907 0890 0873 0857 0842 0826 0812 0797 0783 0769 0756 0743 0731 0718 0706 0694 0683 0672 0661 0 650 0640 0889 0864 0840 0816 0794 0772 0751 0731 0712 0693 0675 0658 0641 0624 0609 0593 0579 0564 0551 0537 0524 0512 0855 0823 0792 0763 0735 0708 0683 0659 0636 0613 0592 0572 0552 0534 0516 0499 0482 0467 0451 0437 0423 0410 0822 0784 0747 0713 0681 0650 0621 0593 0567 0543 0519 0497 0476 0456 0437 0419 0.402 0386 0.370 0355 0341 0328 0790 0746 0705 0666 0630 0596 0564 0535 0507 0480 0456 0432 0410 0390 0370 0352 0.335 0319 0 303 0289 0275 0262 0760 0711 0665 0623 0583 0547 0513 0482 0452 0425 0400 0376 0354 0333 0314 0296 0279 0263 0 249 0235 0222 0210 0731 0677 0627 0582 0540 0502 0467 0434 0404 0376 0351 0327 0305 0285 0266 0249 0233 0218 0204 0191 0179 0168 0703 0645 0592 0544 0500 0460 0424 0391 0361 0333 0308 0284 0263 0243 0225 0209 0194 0180 0167 0155 0144 0134 0676 0614 0558 0508 0463 0422 0386 0352 0322 0295 0270 0247 0227 0208 0191 5% 6% 7% 1 2 4 5 6 7 R 9 0107 0162 0149 0137 0126 0116 0176 10 0650 0585 0527 0475 0429 0388 0350 0317 0287 0261 0237 0215 0195 0178 0162 0148 0135 0123 0112 0625 0557 0 497 0444 0397 0356 0319 0286 0257 0231 0208 0187 0168 0152 0137 0103 0094 0086 11 0102 0092 0083 0076 0069 0124 0112 12 0601 0530 0469 0415 0368 0326 0290 0 258 0229 0204 0182 0163 0145 0130 0116 0104 0093 0084 0075 0068 0061 0055 13 0577 0505 0.442 0388 0340 0299 0263 0232 0205 0181 0160 0555 0481 0417 0362 0315 0275 0239 0 209 0183 0160 0140 0123 0108 0095 0084 0074 0065 0057 0051 0045 0040 0035 0534 0458 0394 0339 0292 0252 0218 0188 0163 0141 0123 0107 0093 0081 0071 0062 0054 0047 0042 0036 0032 0028 0513 0436 0371 0317 0270 0231 0198 0170 0146 0125 0108 0093 0080 0069 0060 0052 0045 0039 0034 0030 0026 0023 0494 0416 0.350 0296 0250 0212 0180 0153 0130 0111 0475 0396 0.331 0277 0232 0194 0164 0138 0116 0.098 0083 0070 0060 0051 0043 0037 0031 0027 0023 0020 0017 0014 0456 0377 0.312 0258 0215 0178 0149 0124 0104 0.087 0073 0061 0051 0043 0037 0031 0026 0022 0019 00% 0014 0012 0099 0088 0078 0069 0062 0055 0049 0044 14 141 0125 0111 15 16 17 18 0095 0081 0 069 0059 0051 0044 0038 0032 0028 0024 0021 0018 19 20 0439 0359 0 294 0242 0199 0164 0135 0112 0422 0342 0278 0226 0184 0150 0123 0101 0083 0068 0056 0046 0038 0032 0026 0022 0018 0015 0013 0011 0406 0326 0 262 0211 0170 0138 0112 0091 0074 0060 0049 0040 0033 0027 0022 0018 0015 0012 0010 0.009 0007 0 006 0093 0077 0064 0053 0.044 0037 0031 0026 0022 0018 0015 0013 0011 0009 21 22 0009 0007 23 0390 0310 0 247 0197 0158 0126 0102 0082 0066 0053 0043 0035 0028 0023 0019 0.015 0013 0010 0008 0007 0006 0 005 0375 0295 0233 0184 0146 0116 0092 0074 0059 0047 0038 0030 0024 0020 0016 0013 0010 0009 0.007 0006 0005 0004 0 361 0281 0220 0172 0135 0106 0084 0066 0053 0042 0033 0026 0021 0017 0014 001 0009 0007 0.006 0005 0004 0003 0.347 0268 0207 0161 0125 0098 0076 0060 0047 0037 0029 0023 0018 0014 0011 0333 0255 0196 0150 o16 0090 0069 0054 0042 0033 0026 0020 00% 0012 0010 0321 0243 0185 0141 0107 0082 0063 0048 0037 0029 00220017 0014 0.011 0008 0 006 0005 0004 0003 0.002 0002 0002 30 24 25 26 27 0.009 0007 0006 0005 0004 0003 0002 0.008 0006 0005 0004 0003 0002 0.002 28 29 0.308 0231 0174 0131 0208 0142 0 097 0067 0046 0032 0022 005 0011 0008 0005 0004 0003 0 002 0001 0001 0.001 0000 0000 0000 0000 0000 0099 0075 0 057 0044 0033 0026 0020 0015 0012 0009 0007 0005 0004 c003 0003 0002 0002 0001 40 -ct-mec EHIBIT 120-2 Present Value of an Annuity of $1 in Arrears; 24% 22% 23 % 21% 19% 20 % 18% 16% 17% 15% 13% 14% 0917 0909 0901 0893 0885 0877 O870 0 862 0855 0847 0840 0833 0826 0820 0 813 0806 0800 1690 1668 1647 1626 1605 1585 1566 1547 1528 1509 1492 1474 10% 12% 9% 8% 6% 7% 5% Periods 4% 0962 0952 0943 0935 0926 1886 2775 3630 3546 3465 3387 4 452 4329 4212 1457 1440 1 1759 2531 2487 2444 2402 2361 2322 2 283 2246 2210 2174 2140 2106 2074 2042 2 011 3240 3170 3 102 3037 294 294 2855 2798 2743 2650 2539 2589 2540 2494 2448 2404 2.362 1736 1713 1833 1808 1783 1981 1952 1859 2723 2673 2624 2577 3 3312 3993 3890 3791 3696 3605 3517 3433 3.352 3274 3199 3127 3.058 2991 2925 2864 2803 2.745 2689 4 4100 5 3998 3.889 3 784 3685 3589 3498 3410 3.326 3245 3167 3092 3020 2.951 4623 4486 4355 4231 4111 506 4917 6.002 5786 5582 5389 5206 5033 4868 4712 4564 4423 4288 4 160 4039 3922 3812 3706 3605 3508 3416 3327 3242 3361 6463 6210 5 971 5747 7108 6802 6515 6247 5995 5759 5537 5328 5132 4946 4772 4607 4451 4303 4163 4031 3905 3786 3673 3566 3463 772 4767 5242 6 5 535 5335 5 146 4968 4799 4639 4487 4344 4207 4078 3954 3.837 3726 3619 3518 3421 3329 6733 7435 6418 6145 5 889 5650 5426 5216 5019 4833 4659 4494 4339 4 192 4054 3923 3799 3682 3571 7360 7024 670 10 811 4035 3902 3 776 3656 8760 8306 7887 7499 7139 9 385 8863 8384 7943 6805 6495 6207 5938 5687 5453 5234 5029 4836 4656 4486 4327 4177 11 7161 684 6 492 6194 5918 5660 5421 5197 4988 4793 4611 4439 4278 4127 3985 3851 3725 9986 9.394 853 8358 7904 7487 703 6750 6424 6122 5842 5 583 5342 5118 4910 4715 4533 4362 4203 4053 3912 3780 4432 4265 4108 3962 3824 8559 8.061 7606 7191 6811 6462 6142 5847 5575 5.324 5092 4 876 4675 4489 4315 4153 4001 3859 9417 R851 8.313 7824 7379 6974 6604 6265 5954 5 668 5405 5 162 4938 4730 4536 4357 4189 4033 3887 8544 8022 7549 7120 6729 6373 6047 5749 5475 5.222 4990 4775 4576 4391 4.219 4059 3.910 12 659 11690 0 828 10.059 9372 8756 8201 7702 7250 6840 6.467 6 128 5818 5534 5.273 5033 4812 4608 4419 4243 4080 3928 10 336 9604 89508365 7839 7.366 6938 6550 6198 5877 5584 5.316 5070 4843 4635 4442 4.263 4097 3942 7536 12 10 563 9899 9295 8745 8244 7786 7367 6982 6628 6302 6002 5724 5468 5229 5.008 4802 4611 14 11118 10 380 971 15 9108 11 652 10838 10 106 12 166 11274 10 477 9763 17 9122 18 13134 12 085 11158 13 590 12 462 11 410 10 594 9818 M029 12 821 11764 10836 1001 M451 13163 12 042 11 061 10201 M857 13 489 12.303 11272 1037 15 247 13799 12 550 1 469 10529 9707 898S 8348 7784 7283 6835 6 434 6073 5746 5451 5182 4937 4713 15622 4094 12 783 11654 10675 9823 9077 8422 7843 7330 6873 6 464 6097 5766 5467 5195 4948 4721 4514 4323 4147 3985 20 9129 8514 7963 7469 7025 6623 6259 5929 5628 5 353 5101 4870 4657 4460 4279 4110 3954 21 9 292 8649 8075 7562 7102 6687 6312 5.973 5665 5.384 5127 4891 4675 4476 4292 4121 9442 8772 8176 7645 71/0 6743 6359 6011 5696 5 410 5149 4909 4690 4488 4302 4130 3970 9 580 8 883 8 266 7718 7230 6792 6399 6044 5723 5432 5167 4925 4703 4499 4311 4137 3976 22 3.963 23 24 25 4507 4318 4143 3981 15 983 375 13003 11826 10 810 9 929 9161 8488 7896 7372 6906 6491 6118 16 330 4643 13 211 11987 10935 10 027 9237 8548 7943 7409 6935 654 6136 5798 5492 5215 4964 4734 4524 4332 4154 3990 16 663 14 898 13 406 12137 11051 0116 16 984 15 141 13591 12 278 11158 17 292 15 372 13 765 12 409 11 258 10 274 9427 8694 8055 7496 7003 6 566 6177 5829 5517 5235 4979 4746 4534 4339 4160 3995 9 793 17159 15.046 13 332 11 925 10757 9779 8951 8244 7634 7105 6 642 6233 5871 5548 5258 4997 4760 4544 4347 4166 3.999 26 27 5783 5480 5206 4956 4728 4520 4328 4151 3988 28 9 307 8602 7984 7441 6961 6534 6152 5810 5502 5 223 4970 4 739 4528 4335 4157 10 198 9370 8 650 8022 7470 6983 6551 6166 5820 5510 5229 4 975 4743 4531 4337 4159 3994 29 3.992 30 40

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