Factor Company is ning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with expected four- fe and a $20,000 salvage value Additional annual information for this new product line follows VS EXof S1 PVA of S1, and EVA of 5) (Use appropriate factors) from the tables provided) Sales of new product Materials, labor, and overhead (except depreciation) inery $ 1,990,000 1,509,000 117,750 162,000 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%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at
a $491,000 cost with an expected four-year life and a $20,000 salvage value Additional annual information for this new product line
follows PV of $. EX of St. PVA of Stand EVA of $ (Use appropriate factors) from the tables provided)
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation Machinery
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
year 4
Required 3
Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative
amounts should be entered with a minus sign. Round your present value factor to 4 decimals and final answers to the nearest
present value
Net Cash
319,000x
< Required 2
Present Value
at 7%
07000
1,509,000
117,750
-
Present Value of
Net Cash Flows
S
223,300
HTS
491,000
192,735
Transcribed Image Text:Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value Additional annual information for this new product line follows PV of $. EX of St. PVA of Stand EVA of $ (Use appropriate factors) from the tables provided) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery 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 year 4 Required 3 Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign. Round your present value factor to 4 decimals and final answers to the nearest present value Net Cash 319,000x < Required 2 Present Value at 7% 07000 1,509,000 117,750 - Present Value of Net Cash Flows S 223,300 HTS 491,000 192,735
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