expected to cost $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The Co sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment for 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 at least an 10% return on this investment must be earned, compute the net present value of this investment. (PV o $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
expected to cost $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The Co sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment for 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 at least an 10% return on this investment must be earned, compute the net present value of this investment. (PV o $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
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
Related questions
Question
Transcribed Image Text:B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is
expected to cost $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects
to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment follows.
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
Chart Values are Based on:
If at least an 10% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA
of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Select Chart
n=
j=
Amount
%
X PV Factor =
< Prev
=
6 of 11
Present Value
H+H
$ 231,000
81,000
46,200
23,100
150,300
80,700
24,210
56,490
Next >
$
Transcribed Image Text: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
If at least an 10% return on this investment must be earned, compute the net present value of this investment. (PV of $1. FV of $1. PV
of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Chart Values are Based on:
Select Chart
Net present value
n =
j=
Amount
%
X
PV Factor
< Prev
E Present Value
6 of 11
‒‒‒
‒‒‒
81,000
46,200
23,100
150,300
80,700
24,210
$ 56,490
Next >
************
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