# Pisa Pizza Parlor is investigating the purchase of a new \$45,000 delivery truck - 17418

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## yousafbhutta

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 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. (Ignore income taxes.)

 Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

 Required: 1. What would be the total annual cash inflows associated with the new truck for capital budgeting purposes? (Omit the "\$" sign in your response.)

 Total annual cash inflows

 2 Find the internal rate of return promised by the new truck. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.)

 Internal rate of return

 3 In addition to the data already provided, assume that due to the unique warming racks, the truck will have a \$13,000 salvage value at the end of six years. Under these conditions, compute the internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.)

 Internal rate of return

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