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Firefox File Edit View History Bookmarks Tools Window Help ???98% ct} Sat 6:47 PM Atika Ishtiaq a E Oracle PeopleSoft Sign-in hcc canvas-Google Search X Chegg Study I Guided Solutior × ?3?https://newconnect.mheducation.com/flow/connect.html .. Search Ch 11 Ex 11-9 Help Save & Exit Submit Saved Check my work 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 equipment's product each year. The expected annual income related to this equipment follows. 10 points Sales Costs 238,000 Materials, labor, and overhead (except depreciation on new equipment 83,000 38,080 23,800 44,88 Depreciation on new equipment Selling and administrative expenses Total costa and expensea Pretax income Income taxes (40%) Net income Hint 37,248 55,872 Ask Print lf 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.) References Values are Based on: t Chart Amount PV Factor Present Value Net present value Mc Prev 1of 1 Next 988

Explanation / Answer

Solution:

Annual cash inflows = Net Income + Depreciation = $55,872 + $38,080 = $93,952

Initial investment = $380,800

Computation of NPV Table values are based on: n= 10 i= 9% Cash flow Table Value Amount Present Value Cash Inflows 6.4176577 $93,952 $602,952 Initital Investment 1 $380,800 $380,800 NPV $222,152

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