factory Company is planning to add a new product to its line. $483,000 cost $23,000 salvage
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine ta $183,000 cost with an expected four year life and a $23,000 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 S1, PVA of 51, and FVA of $1) (Use appropriate factor(s) from the tables provided.) 61,660,000 Expected a l sales of new product Expected annual costs of new product Direct materials Direct Labor Overhead (excluding straight-11e depreciation on new machine) Selling and administrative expenses Income taxes 485,000 679,000 336.000 156,000 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 7% and assuming that cash flows occur at each year-end. (Mint Salvage value is a cash inflow at the end of the asset's life) 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 (Mint 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 Compute straight-line depreciation for each year of this new machine's Me. Straight line depreciation Red Required 2 > Required 1 Required 2 Required 3 Required 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 Selling and admini Income taxes 154,000 240 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 eamed 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 (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 Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period 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 5 Compute this machine's accounting rate of return, assuming that incomdis earned evenly throughout each year. Rate of Retun Choose Numerator Accounting Rate of Return Accounting rate of retur Required 1 Required 2 Required 3 Required 4 Required 5 Compute the net present value for this machine using a discount rate of 7% and assuming that cash flows occur at ea 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: Cash Flow Select Chart Amount x PV Factor Present Value Annual cash flow Residual value Net present value
