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 $840,000 cost with an expected four-year life and a $56,000 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 $1, and FVA of $1 (Use appropriate factor(s) from the tables provided. Round PV factor value to 4 decimal places.) $2,740,000 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 516,000 708,000 696,000 196,000 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 3% 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 Required Required Required 2 3 4 5 Compute straight-line depreciation for each year of this new machine's life. Straight-line depreciation Required Required Required Required Required 1 2 3 4 5 Determine expected net income and net cash flow for each year of this machine's life. Expected Net Income Revenues Sales Expenses Direct materials Direct labor Overhead excluding straight-line depreciation on new machine Straight-line depreciation on new machine Selling and administrative expenses 0 Income tax expense Net income Expected Net Cash Flow Net income Straight-line depreciation on new machine Net cash flow Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Payback Period Choose Payback Choose Numerator: Denominator: Period Annual net Payback Cost of investment cash flow period 0 II Required Required Required Required Required 1 2 3 4. 5 Compute this machine's Required 3 of return, assuming that income is earned evenly throughout each year. Accounting Rate of Return Choose Numerator: 1 Choose Denominator: Accounting Rate of Return Annual after-tax net Annual average Accounting rate of income investment return 0 1 Compute the net present value for this machine using a discount rate of 3% 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.) Show less Chart Values are Based on: n = PV II Factor Present Value $ 0.00 II Cash Flow Select Chart Amount X Annual cash Future Value of an Annuity flow of 1 Residual Future Value of 1 value Present value of cash inflows Present value of cash outflows Net present value II 0.00 $ 0.00