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FIN - Corn Doggy Inc. produces and sells corn dogs

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Question;Corn Doggy Inc. produces and sells corn dogs. The corn 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 $262,000. In addition, Austin estimates that the new machine will increase the company?s annual net cash inflows by $40,300. The machine will have a 12-year useful life and no salvage value.Part (a): Calculate the payback period.Part (b): Calculate the machine?s internal rate of return.Part (c): Calculate the machine?s net present value using a discount rate of 10%.Part (d): Assuming Corn Doggy Inc.?s cost of capital is 10%, is the investment acceptable? Why or why not?

 

Paper#49199 | Written in 18-Jul-2015

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