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 $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 depreclation on the new machine. Additional Information Includes the following. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round PV factor value to 4 declmal places.) $2,090,000 Expected annual sales of new product Expected annual costs of new product Direct materials 490,000 682,000 436,000 170,000 30% Direct labor Overhead (excluding straight-line depreciation on new machine) Selling and administrative expenses Income taxes 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 llfe 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 Required 2 Required 3Required 4 Required 5 Compute straight-line depreciation for each year of this new machine's life traight-line depreciation Required 2> Complete this question by entering your answers in the tabs below Required 1Required 2Required 3Required 4 Required 5 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 Required 3 Required 1 Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3Required 4 Required 5 Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Payback Period hoose Numerator: | 1 | Choose Denominator: Payback Period = Payback period Required 2 Required 4> 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 Numerator: Choose Denominator: Accounting Rate of Return Accounting rate of return Required 3 Required 5 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: n= Cash Flow Amount Select Chart |x| PV Factor l=l Present Value Annual cash flow 0.00 0.00 Residual value 0.00 Net present value
