B2B Co. is considering the purchase of equipment that would allow the company to add...
60.1K
Verified Solution
Link Copied!
Question
Accounting
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 $380,800 with a 10-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 152,320 units of the equipments product each year. The expected annual income related to this equipment follows.
Sales
$
238,000
Costs
Materials, labor, and overhead (except depreciation on new equipment)
83,000
Depreciation on new equipment
38,080
Selling and administrative expenses
23,800
Total costs and expenses
144,880
Pretax income
93,120
Income taxes (30%)
27,936
Net income
$
65,184
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 & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
