BA511-L9A4 - 8 6,000 0.305 Net present value $12,516...

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Student Name: Class: Problem 14-25 DOUGHBOY BAKERY Net Annual Cash Flows Reduction in annual operating costs: Operating costs, present hand method $35,000 Operating costs, new machine Annual savings in operating costs 21,000 Increased annual contribution margin: Total annual cash inflows $24,000 Correct! Net Present Value of New Machine Amount of 16% PV of Item Year(s) Cash Flows Factor Cash Flows Cost of the machine 2010 ($90,000) 1.000 ($90,000) Overhaul required 5 (7,500) 0.476 (3,570) Annual cash inflows 8-Jan 24,000 4.344 104,256 Salvage value
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Unformatted text preview: 8 6,000 0.305 Net present value $12,516 Correct! 14,000 3,000 1,830 DOUGHBOY BAKERY New machine cost $90,000 Life expectancy in years 8 Overhaul costs in 5th year $7,500 Selling price after 8 years $6,000 Annual operating costs of machine $14,000 Annual operating costs of manual icing $35,000 Increased package production from machine per year 5,000 Contribution margin per package $0.60 Required return on investment 16% Check figure: (2) Net present value $12,516 Given Data P14-25:...
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BA511-L9A4 - 8 6,000 0.305 Net present value $12,516...

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