Decision: Emphasize the K707 product Requirement 4. Division D is considering two possible expansion plans. Plan...

Transcribed Image Text:

Decision: Emphasize the K707 product Requirement 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8,410,000. Expected annual net cash inflows are $1,500,000, would begin producing a new product at a cost of $8,150,000. This plan is expected to generate net cash inflows of $1,120,000 per year for 10 years, the estimated useful life of the product line. Estimated residual value for Plan B is $990,000. uses straight-line depreciation and requires an annual return of 8%. with zero residual value at the end of 10 years. Under Plan B, Division D Division D 4a. Compute the payback, the ARR, the NPV, and the profitability index for both plans. Begin by calculating the payback for both plans. (Round your answers to one decimal place, XX) Decision: Emphasize the K707 product Requirement 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8,410,000. Expected annual net cash inflows are $1,500,000, would begin producing a new product at a cost of $8,150,000. This plan is expected to generate net cash inflows of $1,120,000 per year for 10 years, the estimated useful life of the product line. Estimated residual value for Plan B is $990,000. uses straight-line depreciation and requires an annual return of 8%. with zero residual value at the end of 10 years. Under Plan B, Division D Division D 4a. Compute the payback, the ARR, the NPV, and the profitability index for both plans. Begin by calculating the payback for both plans. (Round your answers to one decimal place, XX)