Please provide answer this financial accounting question Eagle Industries is considering the purchase of equipment thatwould allow the company to expand its product line. Theequipment costs $350,000 and has a 10-year life with nosalvage value. The expected annual income for each year fromthis equipment follows:Sales of new product: $220,000Expenses:•••Materials, labor, and overhead (except depreciation) -$120,000Depreciation (equipment) - $35,000Selling, general, and administrative expenses - $25,000Income: $40,000A) Compute the annual net cash flow.B) Compute the payback period.

Step 1: Define Annual Net Cash FlowAnnual Net Cash Flow is the difference between total cash inflows…

Answered: Eagle Industries is considering the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

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A company is considering the purchase of a new machine for $61000. Management predicts that the machine can produce sale of $17300 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $6700 per year including depreciation of $5300 Per year. Income tax expense is $4240 per year based on a tax rate of 40% What is payback period for the new machine ?

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