Bugle's Bagel Bakery Is Investigating the Purchase of a New

question 42

Multiple Choice

Bugle's Bagel Bakery is investigating the purchase of a new bagel-making machine. This machine would provide an annual operating cost savings of $3,650 for each of the next four years. In addition, this new machine would allow the production of one new type of bagel that would result in selling 1,500 dozen more bagels each year. The company earns a contribution margin of $0.90 on each dozen bagels sold. The purchase price of this machine is $13,450, and it will have a four-year useful life. Bugle's discount rate is 14%. (Ignore income taxes in this problem.)
-What is the total annual cash inflow from this machine for capital budgeting purposes?

• A) $3,650.
• B) $4,750.
• C) $5,000.
• D) $5,150.

---

Definitions:

Grignard Synthesis

The formation of a Grignard compound through the reaction of an alkyl or aryl halide with magnesium in dry ether.

Spectroscopic Data

Information obtained from analyzing the interaction between electromagnetic radiation and matter, used to determine chemical composition and structure.

Infrared Spectrum

A spectrum representing the infrared absorption or emission by a substance, used to identify chemical functionalities and molecular structure.

Mass Spectrum

A plot or record that shows the distribution of ions by mass in a sample, used to determine the composition of a substance.