Factor Company is planning to add a new product to its line. To manufacture this product,...
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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 $511,000 cost with an expected four-year life and a $19,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Required: 1. Determine income and net cash flow for each year of this machine's life. $ 1,880,000 1,463,000 123,000 178,000 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 6%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine income and net cash flow for each year of this machine's life. Expected Income Revenues Sales Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery $ 1,463,000 123,000 Selling, general, and administrative expenses 178,000 Total expenses Expected Net Cash Flow 0 Net cash flow $ 1,880,000 1,764,000 < Required 1 Required 2 > 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 $511,000 cost with an expected four-year life and a $19,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Required: 1. Determine income and net cash flow for each year of this machine's life. $ 1,880,000 1,463,000 123,000 178,000 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 6%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine income and net cash flow for each year of this machine's life. Expected Income Revenues Sales Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery $ 1,463,000 123,000 Selling, general, and administrative expenses 178,000 Total expenses Expected Net Cash Flow 0 Net cash flow $ 1,880,000 1,764,000 < Required 1 Required 2 >
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