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 $503,000 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, FV of $1, PVA of $1, and FVA of $1) (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 period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 8%. 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. 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 1 $ Income 1,840,000 1,475,000 120,750 143,000 $ 101,250 $ $ 1,840,000 1,475,000 120,750 143,000 Cash Flow Required 2 > 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 $503,000 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, FV of $1, PVA of $1, and FVA of $1) (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 period, assuming that cash flows occur evenly throughout each year. 3. Compute net present value for this machine using a discount rate of 8%. 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. 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 1 $ Income 1,840,000 1,475,000 120,750 143,000 $ 101,250 $ $ 1,840,000 1,475,000 120,750 143,000 Cash Flow Required 2 > 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
please do not provide solution in image format thank you!
Transcribed Image Text:Required 1 Required 2 Required 3
Compute this machine's payback period, assuming that cash flows occur evenly throughout each year.
Numerator:
Required 1
Years 1-4
Salvage value, year 4
Total
1
Net present value
Payback Period
Denominator:
< Required 1
Required 2
Required 3
Compute net present value for this machine using a discount rate of 8%. (Do not round intermediate calculations. Nega
amounts should be entered with a minus sign. Round your present value factor to 4 decimals and final answers to the n
whole dollar.)
Net Cash
Flows
< Required 2
Payback Period
0
Present Value
at 8%
Required 3 >
Present Value of
Net Cash Flows
$
Required 3 >
0
0
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 $503,000 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, FV of $1, PVA of $1, and FVA of $1) (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 period, assuming that cash flows occur evenly throughout each year.
3. Compute net present value for this machine using a discount rate of 8%.
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.
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 1
$
Income
1,840,000
1,475,000
120,750
143,000
$ 101,250
$
$ 1,840,000
1,475,000
120,750
143,000
Cash Flow
Required 2 >
0
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