please complete part 2-5
Problem 24-1A Computation of payback period, accounting rate of return, and net present value LO P1, P2, P3 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 $600,000 cost with an expected four-year life and a $32,000 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 S1, EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round PV factor value to 4 decimal places.) $2,140,000 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 492,000 684,000 456,000 172,000 300 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 Required 2 Required 3 Required 4 Required Determine expected net income and net cash flow for each year of this machine's life Expected Not Income Re Complete this question by entering your answers in the tabs below. 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 $ 2,140,000 Sales Expenses Direct materials Direct labor Overhead excluding straight-line depreciation on new machine Selling and administrative expenses Straight-line depreciation on new machine Net income Income before taxes Expected Net Cash Flow Income before taxes Prev 1 of 2 BE Next > 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 5. Compute the net present value for this machine using a discount rate of 7% and assuming that cash flows or (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 Denominator: Choose Numerator: Payback Period Payback period Prev 1 of 2 Next > Overhead (excluding straight-line depreciation on new machine) Selling and administrative expenses Income taxes 456,000 172,000 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 ye 5. Compute the net present value for this machine using a discount rate of 7% and assuming that cash flows OCCA (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 income is earned evenly throughout each year. Accounting Rate of Return Choose Denominator: Choose Numerator: Accounting Rate of Return Accounting rate of retum 0 Prev 1 of 2 !!! Next > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Requited 5 Compute the net present value for this machine using a discount rate of 7% and assuming that cash flows occur at each ye end. (Hint: Salvage value is a cash inflow at the end of the asset's life.) (Do not round intermediate calculations. Amounts be deducted should be indicated by a minus sign.) Chart Values are based on no 1 Select Chart Amount PV Factor Cash Flow Annual cash flow Residual value Present Value 0.00 0.00 $ 0.00 Net present value
