Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected

B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $376,000 with a 6-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 150,400 units of the equipments product each year. The expected annual income related to this equipment follows: Sales: $ 235,000 Costs Materials, labor, and overhead (except depreciation on new equipment): 82,000 Depreciation on new equipment: 62,667 Selling and administrative expenses: 23,500 Total costs and expenses: 168,167 Pretax income: 66,833 Income taxes (40%: 26,733 Net income $ 40,100

If at least a 10% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

n = 6, i = ? Present value of annuity 1 = amt (?) x PV factor (?) PV of Cash Inflows = ? PV of Cash Outflows = ? NPV = ?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

Is conflict always unhealthy? Why or why not? (Objective 4)

Answered: 1 week ago