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 $1. EV of $1. PVA of $1. and EVA of $1) Note: Use appropriate fector(s) from the tables provided. Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery selling, general, and administrative expenses Required: 1. Determine Income and net cash flow for each year of this machine's life. 2. Compute this machine's payback penod, 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 Determine income and net cash flow for each year of this machine's life. Required 3 Annual amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow $ Income 1,990,000 1,471,000 117,750 148,000 253,250 $ 1,990,000 1,471,000 117,750 148,000 S Cash Flow 0
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 $1. EV of $1. PVA of $1. and EVA of $1) Note: Use appropriate fector(s) from the tables provided. Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery selling, general, and administrative expenses Required: 1. Determine Income and net cash flow for each year of this machine's life. 2. Compute this machine's payback penod, 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 Determine income and net cash flow for each year of this machine's life. Required 3 Annual amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Net cash flow $ Income 1,990,000 1,471,000 117,750 148,000 253,250 $ 1,990,000 1,471,000 117,750 148,000 S Cash Flow 0
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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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 $1. EV of $1. PVA of $1. and EVA of $1)
Note: Use appropriate factor(s) from the tables provided.
sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation Machinery
selling, general, and administrative expenses
Required:
1. Determine Income and net cash flow for each year of this machine's life.
2. Compute this machine's payback penod, 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 Required 3
Determine income and net cash flow for each year of this machine's life.
Income
Annual amounts
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation Machinery
Selling, general, and administrative expenses
Income
Net cash flow
<Required t
$
$
1,990,000
1,471,000
117,750
148,000
253,250
$
$ 1,990,000
1,471,000
117,750
148,000
Cash Flow
Required 2 >
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