B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $144,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product $ 90,000 Expenses Materials, labor, and overhead (except depreciation) 48,000 Depreciation—Equipment 12,000 Selling, general, and administrative expenses 9,000 Income $ 21,000 (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment. I could not include an image for "C" please answer seperately
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $144,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product $ 90,000 Expenses Materials, labor, and overhead (except depreciation) 48,000 Depreciation—Equipment 12,000 Selling, general, and administrative expenses 9,000 Income $ 21,000 (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting rate of return for this equipment. I could not include an image for "C" please answer seperately
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $144,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows.
| Sales of new product | $ 90,000 |
|---|---|
| Expenses | |
| Materials, labor, and overhead (except |
48,000 |
| Depreciation—Equipment | 12,000 |
| Selling, general, and administrative expenses | 9,000 |
| Income | $ 21,000 |
(a) Compute the annual net cash flow.
(b) Compute the payback period.
(c) Compute the accounting
I could not include an image for "C" please answer seperately
Transcribed Image Text:B2B Company Is considering the purchase of equlpment that would allow the company to add a new product to Its line. The
equipment costs $144,000 and has a 12-year life and no salvage value. The expected annual Income for each year from this equipment
follows.
Sales of new product
$ 90,e0e
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation-Equipment
48, 000
12,000
Selling, general, and administrative expenses
Income
9,000
$ 21,000
(a) Compute the annual net cash flow.
(b) Compute the payback perlod.
(c) Compute the accounting rate of return for this equlpment.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Compute the annual net cash flow.
Annual Results from Investment
Income
Cash Flow
Sales of new product
90,000
Expenses
Materials, labor, and overhead (except depreciation)
48,000
Depreciation-Equipment
12,000
Selling, general, and administrative expenses
9,000
Income
21,000
Net cash flow
Transcribed Image Text:B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The
equipment costs $144,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment
follows.
$ 90,000
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation-Equipment
Selling, general, and administrative expenses
48,000
12,000
9,000
$ 21,000
Income
(a) Compute the annual net cash flow.
(b) Compute the payback period.
(c) Compute the accounting rate of return for this equipment.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Compute the payback period.
Payback Period
Numerator:
Denominator:
Payback period
< RequiredA
Required C >
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