B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $192,000 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 $ 120,000 Expenses Materials, labor, and overhead (except depreciation) 64,000 Depreciation Equipment 16,000 Selling, general, and administrative expenses 12,000 Income $ 28,000 (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment. Complete this question by entering your answers in the tabs below. Required A Required B Required Compute the annual net cash flow. Annual Net Cash Flow initial investment Depreciation-Equipment Net cash flow B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $192,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. $ 120,000 Sales of new product Expenses Materiala, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income 64,000 16,000 12,000 $ 28,000 (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment Complete this question by entering your answers in the tabs below. Required A Required B Required'c Compute the payback period. Numerator: 1 Initial investment s 192,000/ Payback Poriod Denominator: Annual net cash flow Payback period 0 B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $192,000 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 $ 120,000 64,000 16,000 12,000 $ 28,000 (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment Complete this question by entering your answers in the tabs below. Required A Required B Required Compute the accounting rate of return for this equipment. Accounting Rate of Return Numerator: 1 Denominator Average investment $ 96,000 1 Accounting rate of return 0.001%
