GET NIW OFFICE MOBILE APP D - X e productive on the go with the Office Op Get Oce Capital Budgeting Methods - Investment Analysis 6 B2C Inc. is considering the purchase of equipment for two new product lines for a five-year period, Bonuses are determined by the company's return on investment (ROI), 7 each of the last three years. Cost and revenue estimates for each project are as follows: Product Product B $260,000 $470,000 Investment required Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out of pocket operating costs $310,000 $144,000 $52,000 $76,000 $410,000 $194.000 $94,000 $58,000 Johnson's discount rate is 18% View Exhibits 128-1 and 12B-2, in Appendix 12B: Present Value Tables of your textbook, to determine the appropriate discount factor (Brewer, Garrison, & Noreen Activity Based Costing Process Cost M u dort Capital Budgeting Decisions Statement of Cathw a . O Type here to search PARAGRING Lenovo ERUMUNOPREV A POMULUO Merge Center $ - % Formatting Table Styles IBIU-n- a- A- Es Alignment GET NIW OFICE MOBILE APP e productive on the go with the new Office app. Get Office 04 - X 21 You are required to compute the following: 1. Calculate the payback period for each product. 2. Calculate the net present value (NPV) for each product. 3. Calculate the internal rate of return (IRR) for each product. 4. Prepare a memo to the controller, State which project B2C Inc. should invest in. Explain your answer. za 1. Payback Period Product Product B Sales revenues Variable expenses Fixed out-of-pocket operating costs Annual net cash inflows Investment required Annual net cash inflow Activity-Based Costing Process Costing Master Budget Capital Budgeting Decisions Statement of Cash Flow Financial St- O Type here to search Lenovo 230668 OBEE WONOP Annual net cash inflow Payback period (in years) 2. Net Present Value (NPV) Product A Purchase of equipment Sales Variable expenses Fixed out of pocket costs Total cash flows Discount factor (%) - use tables Present value Net present value - Type here to search enovo Alt Curl Formatting Table Styles - - - G NIWON MOBILE APP Be productive on the go with the new orice app Get Office 04 : Now Years 1-5 Product B Purchase of equipment Sales Variable expenses Fixed out-of-pocket costs Total cash flows Discount factor (%) - use tables Present value Net present value 67 3. Internal Rate of Return (IRR) Product Product B Investment rated Activity Based Costing Process Cothing Master Budget Capital Budgeting Decisions Statement of Cash Flow Financial St. Ready Type here to search te Lenovo WERONOPPB 7ROOMKEY All AN car CT NEW ONE MOBILE APP Reproductive on the go with the new Office app Get Office 3. Internal Rate of Return (IRR) Product Product B Investment required Annual net cash inflow Factor of the internal rate of return Internal Rate of Return (estimated) - Use the Exhibit 12B-2 table State how the estimate was determined for both investments: Part 2: Memo to Controller - State which project B2C Inc. should invest in and why. Activity Based Costing Process Costing Master Budget Capital Budgeting Decisions Statement of Cash Flow Financial Su... Type here to search Enovo 12068 BEE SPOMUK " XON NMP
