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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 $371,200 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 148,480 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 232,000 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 81,000 46,400 23,200 150,600 81,400 24,420 $ 56,980 If at least an 9% 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.) If at least an 9% 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.) & Answer is not complete. Chart Values are based on: n = 8 9 i = % Amount Present Value Select Chart Present Value of an Annuity of PV Factor 5.5348 $ 56,980 X X = $ 315,373 $ Present value of cash inflows Present value of cash outflows Net present value 315,373 371,200

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