Question: who knows how to do this B2B Co. is considering the purchase of equipment that would allow the company to add a new product to
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 $377,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 151,040 units of the equipment's product each year. The expected annual income related to this equipment follows Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax incone Income taxes (30%) Net income Chart Values are Based on: If at least an 9% return on this investment must be earned, compute the net present value of this investment. (PV of $1. EV of $1. PVA of $1. and EVA of S1) (Use appropriate factor(s) from the tables provided.) Select Chart. Present value of cash inflows Present value of cash outflows Net present value Amount 9% X PV Factor - $ 236,000 83,000 47,200 23,600 Present Value $ 0 153,800 82,200 24,660 $57,540
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