Problem 26-1A Computing 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 $483,000 cost with an expected four-year life and a $15,000 salvage value All sales are for Co, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following (PV of S1, FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) $2/ 930,000 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 490,000 671,000 337,000 165,000 345 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 6% 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 a Required 4 Required 5 Compute straight-line depreciation for each year of this new machine's life. Straight-line depreciation Required 2 > (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 Determine expected net income and net cash flow for each year of this machine's life. Expected Net Income Revenues Expenses 0 Expected Net Cash Flow 0 $2.930,000 Expected annual sales of new product Expected annual costs of new product Direct materials Direct labor Overhead (excluding straight-line depreciation on new teachine) Selling and administrative expenses Income taxes 490.000 671.000 337.000 165,000 31 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 6% 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 payback period, assuming that cash flows occur ovenly throughout each year. Choose Numerator: Payback Period Choose Denominato Payback Period Payback period 0 yback 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 6% 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 Required Required 5 Compute this machine's accounting rate of retum, assuming that income learned evenly throughout each year. Choose Numerator Accounting Rate of Retum Choose Denominator Accounting Rate of Return Accounting rate of retum 0 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 thout each year 5. Compute the net present value for this machine using a discount rate of 6% and assuming in ash 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 the net present value for this machine using a discount rate of 6% 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. Amount to be deducted should be indicated by a minus sign.) Chart Values are Based on: n % Select Chant Amount X PV Factor Present Value Cash Flow Annual cash flow Residual value 0 0 Net present value