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.
Factor Company is planning to add anew product to its line. To manufacture this product, the company needs to buy a new machine at a $507,000 cost with an expected 4 year life and a $11,000 salvage value. All sales are for cash, and all costs are out of pocket, except for
Expected annual sales of new product $1,870,000, Expected annual costs of new product ?, Direct Materials $490,000, Direct Labor $679,000, Overhead (excluding straight-line depreciation on new machine) $338,000, Selling and administrative expenses $146,000 and Income taxes 36%.
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 accountinr
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