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please help with present value cash outflows Factor Company is planning to add a new product to its line. To manufacture this product, the company

please help with present value cash outflows

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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 $499,000 cost with an expected four-year life and a $15.000 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 $1. PVA of $1, and EVA of $1 (Use appropriate factor(s) from the tables provided.) Expected annual sales of new product $1,940, 060 Expected annual costs of new product Direct materials 465, 809 Direct labor 674,906 Overhead (excluding straight-line depreciation on new machine) 337,006 Selling and administrative expenses 152,090 Income taxes 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.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 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 each 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: n = 40 70 % Cash Flow Select Chart Amount PV Factor Present Value Annual cash flow Present Value of an Annuity of 1 230.420 x 3.3872 0 = S 810.983 Residual value Present Value of 1 15.000 x 0.7629 0 = 11.444 Present value of cash inflows 822. 407 Present value of cash outflows 490.000 0 Net present value 323.407 0

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