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 $507.000 cost with an expected four year life and a $19,000 salvage value. Al sales are for cash, and all costs are out of pocket, cxcept for depreciation on the new machine. Additional information includes the following PV of $1, FV of $1, PVA of $1, and PVA of $1 (Use appropriate factor(s) from the tables provided.) Sixpected antal aalea of new product Expected animal coata of new product Direct zateriala Direct labor Omesheed (excluding straight-line depreciation on ne sachine) Selling and administrative experaca Income taxes $1,340,000 500,000 673,000 338,000 144,000 321 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 Band assuming that cash flows occur at each year end. (Hit Salvage values a cash inflow at the end of the asset's life.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required Compute straight-line depreciation for each year of this new machine's life. Straight-line depreciation Required Required 2 > Required 1 Required 2 Required 3 Required 4 Required 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 0 Required 1 Required 2 Required 3 Required 4 Required 5 Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Payback Period Choose Denominator Choose Numeratori Payback Period Payback period Required 1 Required 2 Required 3 Required 4 Required Compute this machine's accounting rate of return, assuming that income is earned evenly throughout each year. Accounting Rate of Return Choose Numerator Choose Denominator Accounting Rate of Retum 1 Accounting rate of rebum Compute the net present value for this machine using a discount rate of 8% 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: Select Chart Amount x PV Factor Cash Flow Annual cash flow Residual value Present Value 5 Net present value
