Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Compute straight-line depreciation for each year of this new machine's life. Straight-line depreciation Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $503,000 cost with an expected four-year life and a $19,000 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. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Expected annual sales of new product Expected annual costs of new product Direct materials Direct labor $1,960,000 490,000 680,000 338,000 143,000 32% Overhead (excluding straight-line depreciation on new machine) Selling and administrative expenses Income taxes Required: 1. Compute straight-line depreciation for each year of this new machine's life. 2. Determine expected net income and net cash flow for each year of this machine's life. 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 each year. 5. Compute the net present value for this machine using a discount rate of 7% and assuming that cash flows occur at each year-end. (Hint. Salvage value is a cash inflow at the end of the asset's life.) TABLE B.1* p = 1/(1 + iy Present Value of 1 Rate Perlods 1% 2% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9346 0.8734 0.8696 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9259 0.9174 0.9091 0.8929 0.9246 0.7972 0.9803 0.9612 0.9426 0.9070 0.8900 0.8573 0.8417 0.8264 0.7561 0.7513 0.6830 0.6209 0.5645 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7118 0.6575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6355 0.5718 0.7473 0.7130 0.6806 0.9515 0.9420 0.9057 0.8626 0.8219 0.7835 0.6499 0.5674 0.4972 0.8880 0.7903 0.8375 0.7462 0.7050 0.6663 0.6302 0.5963 0.5066 0.4323 0.6651 0.6274 0.5919 0.9327 0.8706 0.8131 0.7599 0.7107 0.6227 0.5820 0.5835 0.5470 0.5019 0.4604 0.5132 0.4523 0.3759 0.6768 0.9235 0.9143 0.8535 0.7894 0.7307 0.5403 0.5002 0.4665 0.4039 0.3269 0.8368 0.4241 0.2843 0.7664 0.7026 0.6446 0.5439 0.3606 10 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3505 0.3186 0.3220 0.2472 0.4751 0.4289 0.3971 0.3677 0.3405 0.8043 0.7885 0.7730 0.7579 0.7430 0.3875 0.3555 11 0.8963 0.7224 0.6496 0.5847 0.5268 0.2875 0.2149 0.6246 0.6006 0.5775 0.5553 0.5339 0.5134 0.4936 0.4746 0.5568 0.5303 0.5051 0.4810 0.4970 0.4688 0.4423 0.4173 0.4440 0.4150 0.3878 0.3624 0.3387 0.3166 0.2959 0.1869 0.1625 0.1413 0.1229 0.8874 0.7014 0.2567 12 0.3262 0.2992 0.2745 0.2292 0.2046 0.1827 13 0.8787 0.6810 0.2897 0.2633 0.2394 0.2176 0.1978 0.1799 0.1635 0.1486 0.6611 14 0.8700 15 0.8613 0.6419 0.6232 0.6050 0.5874 0.3152 0.2919 0.2703 0.2502 0.2317 0.1069 0.0929 0.0808 16 0.8528 0.7284 0.4581 0.3936 0.2519 0.1631 0.1456 0.1300 0.4363 0.4155 0.7142 0.2311 0.2120 17 0.8444 0.3714 0.3503 18 0.8360 0.7002 19 0.8277 0.8195 0.7798 0.6864 0.5703 0.3957 0.3305 0.2765 0.1945 0.1161 0.1037 0.0588 0.0334 0.0703 0.3769 20 0.6730 0.5537 0.4564 0.3118 0.2584 0.2145 0.1784 0.0611 0.0923 0.0573 0.6095 0.3751 0.2953 0.1842 0.1460 0.0994 0.0676 0.1160 25 0.4776 0.2330 0.0304 0.1741 0.1301 0.0151 0.0075 30 0.7419 0.5521 0.4120 0.3554 0.3083 0.2534 0.2314 0.1314 0.0754 0.7059 0.1813 0.1420 35 0.5000 0.4529 0.0937 0.0490 0.0356 0.0189 0.0318 0.0221 40 0.6717 0.3066 0.2083 0.0972 0.0668 0.0460 0.0107 0.0037 *Used to compute the present value of a known future armount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of a= 12 and i = 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest $2,784 today ($5000 x 0.5568). TABLE B.2 f = (1+ iy Future Value of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1.0000 1.0000 1.0900 1.1881 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0700 1.0000 1.0000 1.1000 1.0000 1.0300 1.0609 1.0927 1.0100 1.0200 1.0400 1.0500 1.0600 1.0800 1.1200 1.2544 1.4049 1.1500 1.0201 1.0404 1.0816 1.1025 1.1236 1.1449 1.1664 1.2100 1.3225 1.5209 1.7490 1.0303 1.0612 1.1576 1.1910 1.2625 1.3382 1.4185 1.5036 1.5938 1.2597 3 1.1249 1.2250 1.2950 1.3310 1.0824 1.1041 1.4641 1.3108 4 1.0406 1.1255 1.1699 1.2155 1.2763 1.3401 1.4071 1.4775 1.3605 1.4116 1.5735 1.4693 1.0510 1.1593 1.2167 1.4026 1.5386 1.6105 1.7623 1.9738 2.0114 1.7716 1.9487 1.1941 1.0615 1.1262 1.2653 1.5007 1.5869 1.6771 2.3131 1.0721 1.0829 1.1487 1.1717 1.2299 1.2668 1.3048 1.6058 1.7182 1.7138 1.8280 2.2107 2.4760 2.6600 1.3159 2.1436 2.3579 2.5937 2.8531 1.3686 1.8509 1.9926 2.1719 3.0590 1.0937 1.1951 1.4233 1.5513 1.6895 1.8385 1.9990 2.1589 2.7731 3.5179 1.2190 10 1.1046 1.3439 1.3842 1.4258 1.4802 1.6289 1.7908 1.9672 2.3674 3.1058 4.0456 1.5395 1.6010 2.1049 2.2522 2.4098 2.3316 3.4785 11 1.1157 1.2434 1.2682 1.7103 1.8983 2.5804 2.8127 4.6524 2.0122 2.1329 1.1268 2.5182 12 1.7959 3.1384 3.8960 5.3503 4.3635 1.1381 1.2936 1.4685 1.6651 1.8856 2.7196 3.0658 3.4523 6.1528 1.1495 1.5126 14 1.3195 1.7317 1.9799 2.2609 2.5785 2.9372 3.3417 3.7975 4.8871 7.0757 3.1722 3.4259 3.7000 3.9960 2.3966 2.5404 2.7590 15 1.1610 1.3459 1.5580 1.8009 2.0789 3.6425 3.9703 4.3276 4.1772 5.4736 8.1371 1.1726 1.1843 1.1961 9.3576 10.7613 1.6047 1.6528 1.7024 1.7535 1.8061 16 1.3728 1.8730 2.1829 2.9522 4.5950 6.1304 6.8660 7.6900 2.2920 2.6928 2.8543 3.0256 17 1.4002 1.9479 3.1588 5.0545 1.4282 2.0258 3.3799 3.6165 3.8697 4.7171 18 2.4066 5.5599 12.3755 19 1.2081 1.4568 2.1068 2.5270 4.3157 5.1417 6.1159 8.6128 14.2318 20 1.2202 1.4859 1.6406 2.1911 2.6533 3.3864 3.2071 4.6610 5.6044 6.7275 9.6463 17.0001 16.3665 4.2919 5.7435 7,6861 10.2857 25 1.2824 2.0938 2.6658 5.4274 6.8485 8.6231 10.8347 32.9190 1.3478 2.4273 3.2434 10.0627 14.7853 21.7245 13.2677 20.4140 66.2118 30 1.8114 4.3219 7.6123 17.4494 29.9599 28.1024 35 1.4166 1.9999 2.8139 3.9461 5.5160 10.6766 52.7996 133.1755 1.4889 3.2620 7.0400 14.9745 93.0510 267.8635 40 2.2080 4.8010 31.4094 45.2593 "Used to compute the future value of a known present amount. For example: What is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n= 20 and i= 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4,457.70 ($3,000 x 1.4859). TABLE B.3 /i (1 + i)" Present Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9804 0.9524 0.9901 0.9709 1.9135 0.9615 0.9434 0.9346 0.9259 0.9174 1.7591 0.9091 0.8929 1.6901 2.4018 3.0373 3.6048 0.8696 1.8861 1.8594 2.7232 1.7355 1.9704 1.9416 2.8839 3.8077 1.8334 1.8080 1.7833 1.6257 2.6730 2.6243 2.2832 2.9410 2.8286 2.7751 2.5771 2.5313 2.4869 3.1699 3.7908 4.3553 4.8684 5.3349 3.9020 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 2.8550 4.4518 3.9927 4.6229 5.2064 5.7466 3.8897 4.4859 5.0330 4.7135 5.6014 6.4720 4.5797 4.3295 4.8534 4.2124 4.1002 4.7665 5.3893 5.9713 6.5152 3.3522 4.9173 5.5824 6.2098 3.7845 4.1604 4.4873 5.7955 5.4172 5.2421 5.0757 4.1114 6.7282 7.6517 6.2303 7.0197 5.7864 6.4632 7.1078 4.5638 6.0021 5.5348 5.9952 4.9676 5.3282 7.3255 6.7327 7.4353 4.7716 8.5660 8.1622 7.7861 6.8017 6.2469 5.7590 7.3601 9.4713 8.9826 8.5302 8.1109 7.7217 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 9.2526 7,8869 8.3838 6.4951 6.8137 10.3676 9.7868 8.7605 8.3064 7.4987 7.1390 6.8052 5.9377 5.2337 7.5361 11.2551 10.5753 9.9540 9.3851 8.8633 7.9427 7.1607 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 5.7245 5.8474 5.9542 13.0037 9.8986 7.3667 12.1062 11.2961 10.5631 9.2950 8.7455 8.2442 7.7862 6.6282 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 11.6523 12.1657 12.6593 13.1339 13.5903 15.6221 7.8237 8.0216 8.2014 14.7179 13.5777 12.5611 10.8378 10.1059 9.4466 8.8514 8.3126 6.9740 11.2741 11.6896 12.0853 12.4622 7.1196 7.2497 7.3658 7.4694 7.8431 8.0552 8.1755 8.2438 15.5623 14.2919 13.1661 10.4773 9.7632 9.1216 8.5436 6.0472 13.7535 14.3238 14.8775 10.0591 10.3356 10.5940 8.7556 8.9501 9.1285 16.3983 14.9920 10.8276 9.3719 6.1280 6.1982 6.2593 15.6785 8.3649 8.5136 9.0770 9.4269 9.6442 9.7791 17.2260 18.0456 22.0232 11.1581 9.6036 9.8181 11.4699 16.3514 19.5235 22.3965 24.9986 27.3555 17.4131 14.0939 12.7834 11.6536 10.6748 9.8226 6.4641 13.7648 11.2578 10.2737 10.5668 10.7574 25.8077 19.6004 17.2920 18.6646 19.7928 15.3725 16.3742 17.1591 12.4090 6.5660 12.9477 6.6166 29.4086 21.4872 14.4982 11.6546 32.8347 23.1148 15.0463 11.9246 13.3317 6.6418 *Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%? For (n = 10, i= 9%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177). TABLE B.4 f= [(1 + iy" 1]/i Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 2.1500 3.2464 4.5061 3.3100 4.6410 3.1525 3.1836 3.2149 3.2781 3.0301 3.0604 3.0909 3.1216 3.3744 3.4725 4.0604 4.1216 4.7793 4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5731 4.9934 5.9847 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 6.1051 6.3528 6.7424 6.1520 7.3359 7.7156 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.5233 8.1152 8.7537 7.6625 8.1420 10.0890 7.2135 7.4343 7.8983 8.3938 8.6540 8.9228 9.2004 9.4872 11.0668 8.2857 8.5830 8.8923 9.2142 9.5491 11.0266 12.5779 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 13.7268 13.0210 16.7858 20.3037 24.3493 9.3685 9.7546 10.1591 10.5828 11.4913 11.9780 12.4876 13.5795 15.9374 18.5312 14.7757 11.4639 12.8078 13.1808 14.9716 14.4866 10 10.4622 10.9497 12.1687 12.0061 13.4864 15.0258 13.8164 15.1929 17.5487 11.5668 12.6825 15.7836 17.5603 20.6546 11 14.2068 16.6455 12 13.4121 14.1920 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 34.3519 26.0192 29.3609 33.0034 36.9737 15.9739 19.5986 14 14.9474 16.0969 17.2579 18.4304 17.0863 18.2919 20.0236 21.8245 21.0151 22.5505 24.2149 27.9750 32.3926 40.5047 23.2760 25.6725 18.5989 25.1290 47.5804 15 16 17.2934 21.5786 27.1521 31.7725 37.2797 35.9497 40.5447 23.6575 27.8881 30.3243 42.7533 55.7175 65.0751 75.8364 18.6393 20.1569 25.8404 28.1324 20.0121 21.7616 21.4123 23.4144 23.6975 17 28.2129 30.8402 33.7502 48.8837 18 19.6147 25.6454 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 20 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 54.8645 25 28.2432 32.0303 36.4593 41.6459 47.7271 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 79.0582 30 34.7849 41.6603 40.5681 47.5754 56.0849 66.4388 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 60.4621 75.4013 73.6522 215.7108 271.0244 35 49.9945 90.3203 111.4348 138.2369 172.3168 431.6635 881.1702 48.8864 60.4020 199.6351 767.0914 1,779.0903 40 95.0255 120.7998 154.7620 259.0565 337.8824 442.5926 "Used to calculate the future value of a series of equal pay ments made at the end of each period. For example: What is the future value of $4,000 per year for 6 years assuming an annual interest rate of 8%? For (n = 6, i = 8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to $29,343.60 ($4,000 x7.3359). Required 1 Required 2 Required 3 Required 4 Required 5 Determine expected net income and net cash flow for each year of this machine's life. Expected Net Income Revenues Expenses Expected Net Cash Flow Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 4 Required 5 Required 1 Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period Complete this question by entering your answers in the tabs below. Required 3 Required 1 Required 2 Required 4 Required 5 Compute this machine's accounting rate of return, assuming that income is earned evenly throughout each year. Accounting Rate of Return Choose Denominator: Choose Numerator: Accounting Rate of Return Accounting rate of return Required 1 Required 2 Required 3 Required 4 Required 5 Compute the net present value for this machine using a discount rate of 7% and assuming that cash flows occur at each year-end. (Hint: Salvage value is a cash inflow at the end of the asset's life.) (Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign.) Chart Values are Based on: j= Cash Flow PV Factor Select Chart Amount Present Value Annual cash flow Residual value Net present value