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Exercise 24-9 Computing net present value LO P3 B2B Co. is considering the purchase of equipment that would allow the company to add a new
Exercise 24-9 Computing net present value LO P3 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 $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 147840 units of the equipment's product each year. The expected annual income related to this equipment follows. 231,000 Coats 81,000 46, 200 23, 100 Depreciation on new equipment Total costs and expensea Pretax income Incone taxes (209) 16,140 $64, 560 t at least an 10% return on this investment must be earned, compute the net present value of this investment of $1, and FVA of $1 (Use appropriate factor(s) from the tables provided.) f E are Based on: 10% K Prev 3 of 6 Next
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