Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine a $580,000 cost with an expected four-year life and a $30,000 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 S1, FV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided. Round PV factor value to 4 decimal places.) $2,090,000 Expected annual sales of new product Expected annual costs of new product Direct materials Direct labor Overhead (excluding straight-line depreciation on new Selling and administrative expenses Income taxes sachine 490,000 682.000 436,000 170,000 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 4% 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.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 (Prey 25 of 30 Now Search Income taxes Help So 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 4% 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.) Complete this question by entering your answers in the tabs below. Required i Required 2 Required 3 Required 4 Required 5 Compute straight-line depreciation for each year of this new machine's life. Straight-line depreciation Required 2 > 25 of 30 II Next > to search 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 Required 2 > Saved Expected Net Income Revenues Expenses 11 Expected Net Cash Flow Required 1 Required 3 > Prey 25 of 30 !!! Next Lemy your answers in the tabs below. Required 1 | Required 2 Required 3 Required 4 Required 5 Compute this machine's payback period, assuming that cash flows occur evenly throu Payback Period Choose Numerator: 1 Choose Denominator: = Payback Period Payback period UCUSUWS UL Wow 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 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 ( A JLUUTILISI UI 1% and assuming that cash flows occur at each l Salvage value is a cash inflow at the end of the asset's life.) UT Complete this question by entering your answers in the tabs below. 52.00 Required 1 Required 2 Required 3 Required 4 Required 5 Compute the net present value for this machine using a discount rate of 4% 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 - Present Value Cash Flow Annual cash flow Residual value Net present value
