Calculate the discounted payback period

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Question - 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:

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.

Required -

a. Calculate the Net present value? (NPV). ?

b. Calculate the Payback period.

c. Calculate the Discounted payback period.

Reference no: EM133074935

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