Question
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $369,600 and has a 8-year life and no salvage value. B2B Company requires at least an 8% return on this investment The expected annual income for each year from this equipment follows: (PV of $1, EV of $1. PVA of $1. and EVA of 5) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Incone (a) Compute the net present value of this investment. $231,000 81,000 46,200 23,100 5 80,700 (b) Should the investment be accepted or rejected on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals and other final answers to the nearest whole dollar.) Annual Net Cash Flows Present Value of Annuity at 8% Present Value of Net Cash Flows Years 1 through 8 Next>
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