Beyer Company is considering the purchase of an asset for $240,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 $60,000 Year 2 $36,000 Year 3 $60,000 Year 4 $150,000 Year 5 $25,000 Total $331,000 Net cash flows Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback period answer to 2 decimal place.) Year 0 1 Cumulative Cash inflow Net Cash (Outflow) Inflow (Outflow) $ (240,000)| $ (240,000) 60,000 36,000 [ 60,000 150,000 25,000 2 3 - 5 Payback period = 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 $377,600 with a 4-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 151,040 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 236,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income 83,000 94,400 23,600 201,000 35,000 10,500 $ 24,500 If at least an 8% 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.) Chart Values are Based on: na i = Select Chart Present Value of an Annuity of 1 1 $ 4 8% Amount x 118,900 X PV Factor = Present Value Present value of cash inflows Present value of cash outflows Net present value Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $260,000 and have a useful life of six years. The system yields an incremental after-tax income of $75,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. b. A machine costs $190,000, has a $14,000 salvage value, is expected to last seven years, and will generate an after-tax income of $41,000 per year after straight-line depreciation. Payback Period Payback Period Choose Choose Numerator: 1 Denominator: Cost of investment Annual net cash flow 260,00011 = Payback period a