1. Annual Income Tax Expense?

2. Net Present Value?

Winthrop Company has an opportunity to manufacture and sell a new product for a five-year period. To pursue this opportunity, the company would need to purchase a piece of equipment for $160,000. The equipment would have a useful life of five years and zero salvage value. It would be depreciated for financial reporting and tax purposes using the straight-line method. After careful study, Winthrop estimated the following annual costs and revenues for the new product: Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $310,000 $150,000 s 76,000 The company's tax rate is 30% and its after-tax cost of capital is 16%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables