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Exercise 11-9 Computing net present value LOP3 B2B Co. is considering the purchase of equipment that would allow the company to add a new product
Exercise 11-9 Computing net present value LOP3 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 $379,200 with a 10-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 151,680 units of the equipment's product each year. The expected annual income related to this equipment follows $ 237,000 83. 37,920 23,700 Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipent Selling and dinistrative expenses Total costs and expenses Pretax income Income taxes (40) Net Income 92,350 $ 55,425 If at least an 9% return on this investment must be earned, compute the net present value of this investment CV of $1. EV of $1. PVA of $1. and EVA SD (Use appropriate foctor(s) from the tables provided.) Chart Values are based on PV Factor - Present Value
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