Problem 24-1A (Algo) Payback period, net present value, and net cash flow calculation LO P1, P3 Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine a $479,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new product line ollows. (PV of $1. EV of $1. PVA of $1. and EVA of S1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Required: 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine income and net cash flow for each year of this machine's life. Annual amounts Income Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow $ 1,990,000 1,478,000 117,250 152,000 $ 242.750 $ 1,990,000 1,478,000 117,250 152,000 $ Cash Flow

Problem 24-1A (Algo) Payback period, net present value, and net cash flow calculation LO P1, P3 Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine a $479,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new product line ollows. (PV of $1. EV of $1. PVA of $1. and EVA of S1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Required: 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 7%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine income and net cash flow for each year of this machine's life. Annual amounts Income Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow $ 1,990,000 1,478,000 117,250 152,000 $ 242.750 $ 1,990,000 1,478,000 117,250 152,000 $ Cash Flow

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 12PROB

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