B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $360,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment. $ 225,000 120,000 30,000 38,250 $ 36,750 Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the annual net cash flow. Annual Results from Investment Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income Net cash flow Income Cash Flow $ 225,000 120,000 30,000 38.250 $ 36,750 $ 0 Required B > Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 10% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Initial investment Pool Spa $ (160,000) $ (105,000) Net cash flows in: Year 1 40,000 32,000 Year 2 56,000 50,000 Year 3 80,295 66,000 Year 4 90,400 72,000 Year 5 65,000 24,000 a. For each investment project compute the net present value. b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Req A Req B and C For each alternative project compute the net present value. Present Value Pool Net Cash Flows X Present Value of Net Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Totals $ 0 Spa Net Cash Flows x Present Value Year 1 Year 2 Year 3 Year 4 Year 5 Totals EA $ 0 H Present Value of Net Cash Flows Req A Req B and C b. For each alternative project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index? Numerator: Profitability Index Denominator: == Profitability index Pool Spa If the company can only select one project, which should it choose on the basis of profitability index? 0 0 Salsa Company is considering an investment in technology to improve its operations. The investment costs $248,000 and will yield the following net cash flows. Management requires a 7% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year Net cash Flow $ 47,800 12345 Required: 54,000 76,400 94,600 125,200 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. 4. Should management invest in this project based on net present value? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the payback period for this investment. (Enter cash outflows with a minus sign. Round your Payback Perio to 1 decimal place.) Year Net Cash Flows Initial investment $ SA (248,000) Year 1 47,800 Year 2 54,000 Year 3 76,400 Year 4 94,600 Year 5 125,200 Payback period Cumulative Net Cash Flows Required 2 > Required 1 Required 2 Required 3 Required 4 Determine the break-even time for this investment. (Enter cash outflows with a minus sign. Round y answer to 1 decimal place.) Year Net Cash Flows Present Value of Present Value of Net 1 at 7% Cash Flows per Year Cumulative Present Value of Net Cash Flows Initial investment $ (248,000) Year 1 Year 2 Year 3 Year 4 Year 5 Break-even time years < Required 1 Required 3 > 0 0 0 Required 1 Required 2 Required 3 Required 4 Determine the net present value for this investment. Net present value Required 1 Required 2 Required 3 Required 4 Should management invest in this project based on net present value? Should management invest in this project based on net present value? < Required 3 Required 4