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Sawid B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is
Sawid 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 $369,600 with a 4-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 231,000 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 (409) Net income 81,000 92,400 23,100 196.500 34,500 13.600 $ 20,700 If at least an 9% return on this investment must be earned, compute the net present value of this investment. PV o SI. FV of $1. PVA $1, and EVA of $1 (Use appropriate factor(s) from the tables provided.) Chart Values are Based on: n % x Amount PV Factor Present Value Select Chart Net present value
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