The Ohio State University Operations And Supply Chain Management Assignment Help - Pisa Pizza Parlor

Question - Pisa Pizza Parlor is investigating the purchase of a new $45,000 delivery truck that would contain
specially designed warming racks. The new truck would have a six-year useful life. It would save
$5,400 per year over the present method of delivering pizzas. In addition, it would result in the sale of
1,800 more pizzas each year. The company realizes a contribution margin of $2 per pizza.
Required:
(Ignore income taxes.)
1. W hat would be the total annual cash inflows associated with the new truck for capital budgeting
purposes?
2. Find the internal rate of return promised by the new truck to the nearest whole percent.
3. In addition to the data above, assume that due to the unique warming racks, the truck will have a
$13,000 salva ...Read More ge value at the end of six years. Under these conditions, compute the internal rate of
return to the nearest whole percent. ...Read Less

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