Chopter 11 Capital Budgeong and Investment Analysis a connect M SET A Factor Company is plaming to add a new product to its line. To manufacture this product, the company nceds to buy a new machine at a $480,000 cost with an expected four-year life and a $20,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. lem 11-1A utation of payback 1, accounting f return, and net nt value $1,840,000 Expected annual sales of new product....... Expected annual costs of new product P2 P3 Direct materials Direct labor, Overhead (lexcluding straight-ne depreciation on new machine) Seling and administrative expenses Income taxes 672,000 160,000 1. Compute straight-line depreciation for each year of this new machine's life. (Round depreciation 2. Determine expected net income and net cash flow for each year of this machine's life. (Round answers 3. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year 4. Compute this machine's accounting rate of return, assuming that income is earned evenly throughout 5. Compute the net present value for this machine using a discount rate of 7% and assuming that cash amounts to the nearest dollar.) to the nearest dollar.) Round the payback period to two decimals.) each year. (Round the percentage return to two decimals.) flows occur at each year-end. (Hint: Salvage value is a cash inflow at the end of the asset's life. Round K (4) 21.56% (5) $107.356 the net present value to the nearest dollar.)