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 $503,000 cost with an expected four-year life and a $20,000 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. $ 1,890,000 1,483,000 120,750 167,000 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. Annual amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow Income Cash Flow $ 1,890,000 1,483,000 120,750 167,000 $ 119,250 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 $503,000 cost with an expected four-year life and a $20,000 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. $ 1,890,000 1,483,000 120,750 167,000 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 Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Numerator: Payback Period Denominator: Payback Period < Required 1 Required 3 > 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 $503,000 cost with an expected four-year life and a $20,000 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. $ 1,890,000 1,483,000 120,750 167,000 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 Compute net present value for this machine using a discount rate of 6%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Salvage value, year 4 Total Net present value Net Cash Flows Present Value Present Value of at 6% Net Cash Flows < Required 2 Required 3 > Table B.1* Present Value of 1 p = 1/(1+i)n Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 2 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 7 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 8 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 9 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 10 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 11 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 12 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 13 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 14 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 15 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 16 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 17 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 18 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 19 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 20 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 25 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 30 0.7419 0.5521 0.4120 0.3083 0.2314 0.1741 35 0.7059 0.5000 0.3554 0.2534 0.1813 40 0.6717 0.4529 0.3066 0.2083 0.1420 0.1301 0.0972 0.1314 0.0994 0.0937 0.0676 0.0668 0.0460 0.0754 0.0573 0.0334 0.0151 0.0490 0.0318 0.0356 0.0221 0.0189 0.0107 0.0075 0.0037 34567800=2211672222239 *Used to compute the present value of a known future amount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n = 12 and i = 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest $2,784 today ($5,000 x 0.5568). Table B.2*Future Value of 1 f = (1 + i)" Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0 1 1.0100 1.0200 1.0300 1.0400 1.0500 1.0600 1.0700 1.0800 1.0900 1.1000 1.1200 1.1500 1 2 1.0201 1.0404 1.0609 1.0816 1.1025 1.1236 1.1449 1.1664 1.1881 1.2100 1.2544 1.3225 2 3 1.0303 1.0612 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049 1.5209 3 4 1.0406 1.0824 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735 1.7490 4 5 1.0510 1.1041 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623 2.0114 5 6 1.0615 1.1262 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738 2.3131 6 7 1.0721 1.1487 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107 2.6600 7 8 1.0829 1.1717 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760 3.0590 8 9 1.0937 1.1951 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731 3.5179 9 10 1.1046 1.2190 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058 4.0456 10 11 1.1157 1.2434 1.3842 1.5395 1.7103 1.8983 2.1049 2.3316 2.5804 2.8531 3.4785 4.6524 11 12 1.1268 1.2682 1.4258 1.6010 1.7959 2.0122 2.2522 2.5182 2.8127 3.1384 3.8960 5.3503 12 13 1.1381 1.2936 1.4685 1.6651 1.8856 2.1329 2.4098 2.7196 3.0658 3.4523 4.3635 6.1528 13 14 1.1495 1.3195 1.5126 1.7317 1.9799 2.2609 2.5785 2.9372 3.3417 3.7975 4.8871 7.0757 14 15 1.1610 1.3459 1.5580 1.8009 2.0789 2.3966 2.7590 3.1722 3.6425 4.1772 5.4736 8.1371 15 16 17 18 19 20 25 30 35 40 5||[ 1.1726 1.3728 1.6047 1.8730 2.1829 2.5404 2.9522 3.4259 3.9703 4.5950 6.1304 9.3576 16 -- 1.1843 1.4002 1.6528 1.9479 2.2920 2.6928 3.1588 3.7000 4.3276 5.0545 6.8660 10.7613 17 1.1961 1.4282 1.7024 2.0258 2.4066 2.8543 3.3799 3.9960 4.7171 5.5599 7.6900 12.3755 18 1.2081 1.4568 1.7535 2.1068 2.5270 3.0256 3.6165 4.3157 5.1417 6.1159 1.2202 1.4859 1.8061 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 1.2824 1.3478 1.6406 2.0938 1.8114 2.4273 2.6658 3.3864 4.2919 5.4274 6.8485 8.6231 8.6128 14.2318 6.7275 9.6463 16.3665 10.8347 17.0001 19 20 32.9190 25 1.4166 1.9999 2.8139 1.4889 2.2080 3.2434 4.3219 3.9461 5.5160 3.2620 4.8010 7.0400 5.7435 7.6861 10.2857 7.6123 10.0627 66.2118 10.6766 14.7853 20.4140 28.1024 52.7996 133.1755 14.9745 21.7245 31.4094 45.2593 93.0510 267.8635 13.2677 17.4494 29.9599 30 35 40 * Used to compute the future value of a known present amount. For example: What is the accumulated value of $3,000 invested today at 8% compounded quarterly for 5 years? Using the factors of n = 20 and i = 2% (20 quarterly periods and a quarterly interest rate of 2%), the factor is 1.4859. The accumulated value is $4,457.70 ($3,000 1.4859). Table B.3*Present Value of an Annuity of 1 p=[1 - 1/(1+i)"]/i Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 2 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 3 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 4 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 5 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 6 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 7 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 8 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 4.7665 4.6229 5.3893 5.2064 5.9713 5.7466 9 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 10 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 11 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 12 11.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 7.5361 13 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 14 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 15 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 16 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 17 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 18 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 .]]]]]]]]]]]]]]]]]] 0.9174 0.9091 0.8929 0.8696 1 1.7591 1.7355 1.6901 1.6257 2 2.5313 2.4869 2.4018 2.2832 3 3.2397 3.1699 3.0373 2.8550 4 3.8897 3.7908 3.6048 3.3522 5 4.4859 4.3553 4.1114 3.7845 6 5.0330 4.8684 4.5638 4.1604 7 5.5348 5.3349 4.9676 4.4873 8 5.9952 5.7590 5.3282 4.7716 9 6.4177 6.1446 5.6502 5.0188 10 6.8052 6.4951 5.9377 5.2337 11 7.1607 6.8137 6.1944 5.4206 12 7.4869 7.1034 6.4235 5.5831 13 7.7862 7.3667 6.6282 5.7245 14 8.0607 7.6061 6.8109 5.8474 15 8.3126 7.8237 6.9740 5.9542 16 8.5436 8.0216 7.1196 6.0472 17 8.7556 8.2014 7.2497 6.1280 18 19 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 19 20 18.0456 16.3514 14.8775 13.5903 25 22.0232 19.5235 17.4131 15.6221 30 25.8077 22.3965 19.6004 17.2920 35 40 29.4086 24.9986 21.4872 18.6646 32.8347 27.3555 23.1148 12.4622 14.0939 15.3725 16.3742 19.7928 17.1591 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 20 12.7834 11.6536 10.6748 9.8226 9.0770 13.7648 12.4090 11.2578 10.2737 9.4269 14.4982 12.9477 11.6546 10.5668 9.6442 15.0463 13.3317 11.9246 10.7574 9.7791 7.8431 6.4641 25 8.0552 8.1755 8.2438 6.5660 30 6.6166 6.6418 35 40 *Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%? For (n = 10, i = 9%), the PV factor is 6.4177. $2,000 per year for 10 years is the equivalent of $12,835 today ($2,000 x 6.4177). Table B.4% Future Value of an Annuity of 1 f= [(1+i)" - 1]/i Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1 2 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 2.1500 2 3 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 3.4725 3 4 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 4.9934 4 5 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.7424 5 6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 8.7537 6 7 7.2135 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 11.0668 7 8 8.2857 8.5830 9 9.3685 8.8923 9.7546 10.1591 10 10.4622 10.9497 9.2142 10.5828 11.4639 12.0061 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 13.7268 8 11.0266 11 11.5668 12.1687 12.8078 13.4864 12 12.6825 13.4121 13 14 15 13.8093 14.6803 15.6178 16.6268 14.9474 15.9739 17.0863 18.2919 16.0969 17.2934 18.5989 16 17.2579 18.6393 20.1569 12.5779 14.2068 14.1920 15.0258 15.9171 17.7130 19.5986 20.0236 21.5786 21.8245 23.6575 17 18.4304 20.0121 21.7616 18 19.6147 21.4123 23.4144 19 20.8109 22.8406 25.1169 20 22.0190 24.2974 25.6454 28.1324 27.6712 30.5390 26.8704 29.7781 33.0660 25 28.2432 32.0303 30 35 40 36.4593 41.6459 47.7271 34.7849 40.5681 47.5754 56.0849 66.4388 41.6603 49.9945 60.4621 73.6522 90.3203 48.8864 60.4020 75.4013 95.0255 120.7998 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 14.9716 15.7836 16.6455 17.5603 18.5312 20.6546 24.3493 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 34.3519 21.0151 22.5505 24.2149 26.0192 27.9750 32.3926 40.5047 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 23.6975 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 79.0582 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 111.4348 138.2369 172.3168 215.7108 271.0244 431.6635 881.1702 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903 16.7858 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 Used to calculate the future value of a series of equal payments made at the end of each period. For example: What is the future value of $4,000 per year for 6 years assuming an annual interest rate of 8%? For (n = 6, i = 8%), the FV factor is 7.3359. $4,000 per year for 6 years accumulates to $29,343.60 ($4,000 7.3359).