Question: Please help me with the blanks. Thanks! Exercise 11-9 Computing net present value LO P3 B2B Co. is considering the purchase of equipment that would
Exercise 11-9 Computing net present value LO P3 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 $379,200 with a 6-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 151,680 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 237,000 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 (306) Net Income 83,009 63,200 23780 169,900 67,160 20130 46,970 $ If at least an 9% return on this investment must be earned, compute the net present value of this investment (Py of $1. EV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided.) Chart Values are based on: Amount X PV Factor Select Chart Present Value of an Annuity of 1 = Present Value $ Present value of cash inflows Present value of cash outflows Net present value
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
