B2B Company is considering the purchase of equipment that would allow the company to add a...
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B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $376,000 and has a 6-year life and no salvage value. B2B Company requires at least an 10% return on this investment. The expected annual income for each year from this equipment follows: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income (a) Compute the net present value of this investment. $ 235,000 82,000 62,667 23,500 $ 66,833 (b) Should the investment be accepted or rejected on the basis of net present value? Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals and other final answers to the nearest whole dollar.) Years 1 through 6 Initial investment Net present value Annual Net Cash x Flows Present Value of Annuity at 10% Present Value of Net Cash Flows = $ 0 376,000 B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $376,000 and has a 6-year life and no salvage value. B2B Company requires at least an 10% return on this investment. The expected annual income for each year from this equipment follows: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income (a) Compute the net present value of this investment. $ 235,000 82,000 62,667 23,500 $ 66,833 (b) Should the investment be accepted or rejected on the basis of net present value? Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals and other final answers to the nearest whole dollar.) Years 1 through 6 Initial investment Net present value Annual Net Cash x Flows Present Value of Annuity at 10% Present Value of Net Cash Flows = $ 0 376,000
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