To manufacture this product, the company needs to buy a new machine at a $860,000 cost with an expected four-year life and a $58,000 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 FVA of $1)

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 $860,000 cost with an expected four-year life and a $58,000 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 FVA of $1) (Use appropriate factor(s) from the tables provided. Round PV factor value to 4 decimal places.) $2,790,000 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 ar administrative expenses Income taxes 518,000 710,000 716,000 198,000 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 year. 5. Compute the net present value for this machine using a discount rate of 4% 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.) Compute straight-line depreciation for each year of this new machine's life. Straight-line depreciation Expected Net Income Revenues Expenses 0 Expected Net Cash Flow 0 Payback Period Choose Numerator: / Choose Denominator: Payback Period II Payback period = 0 Compute this machine's accounting rate of return, assuming that income is earned evenly throughout each Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return Accounting rate of return 0 Chart Values are Based on: n = Cash Flow Select Chart Amount PV Factor Present Value Annual cash flow 0.00 A Residual value = 0.00 $ 0.00 Net present value