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 $499,000 cost with an expected four year ife and a $19,000 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 $1. FV of $1. PVA of St. and FVA OF so (Use appropriate factors from the tables provided.) $1,970,000 Expected annual sales of new product Expected annual costs of new product Direct materials Direct labor Overhead (excluding straight-line depreciation on new machine) Selling and administrative expenses Income taxes 485,00 677,000 337,000 163,000 30% 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 7% and assuming that cash flows occur at each year-end (Hint Salvage values a cash inflow at the end of the asser's life) Complete this question by entering your answers in the tabs below. Required 1 Required Required Required Determine expected net income and it cash flow for each year of this machine's life. Expected Met income Reven 3 1970,000 Expenses $ Director Overhead excluding streghe depreciation on w machine $5,000 677 000 337000 163.000 120,000 1,782,000 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 $499,000 cost with an expected four year life and a $19,000 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 St. FV of $1. PVA of 51, and FVA of 5.1 (Use appropriate factor(s) from the tables provided.) $1,970,000 Expected annual sales of new product Expected annual costs of new product Direct materials Direct labor Overhead (excluding straight-line depreciation on new machine) Selling and administrative expenses Income taxes 485,000 677, eee 337,000 163,000 3ex 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 7% 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 Compute the net present value for this machine using a discount rate of 7% 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 Ves are based on: Select Chart Amount PV Factor-Present Value Cashow Annual cash low Residual Nel present value
