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PLEASE HELP B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment
PLEASE HELP
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $376,000 with a 4-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 150,400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 235,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income 82,000 94,000 23,500 199,500 35,500 10,650 $ 24,850 If at least an 9% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)Step by Step Solution
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