B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. expected to cost $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. T to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment 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 (30%) Net income $ 231,000 81,000 46,200 23,100 150,300 80,700 24,210 $ 56,490 t least an 10% return on this investment must be earned, compute the net present value of this investment. (E factor(c) from the tables provided)
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. expected to cost $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. T to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment 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 (30%) Net income $ 231,000 81,000 46,200 23,100 150,300 80,700 24,210 $ 56,490 t least an 10% return on this investment must be earned, compute the net present value of this investment. (E factor(c) from the tables provided)
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 14P
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