Solution 1:
Straight line depreciation = ($480000- $20000) / 4 = $115,000
Solution 2:
Expescted Net Income | ||
Revenues: | ||
Sales | $18,40,000 | |
Expenses: | ||
Direct Materials | $4,80,000 | |
Direct Labor | $6,72,000 | |
Overhead excluding depreciation | $3,36,000 | |
Selling and administrative expenses | $1,60,000 | |
Straight line depreciation | $1,15,000 | |
Total Expenses | $17,63,000 | |
Income before taxes | $77,000 | |
Income tax expense (30%) | $23,100 | |
Net Income | $53,900 | |
Expected net Cash Flow | ||
Net Income | $53,900 | |
Add: Straight line Depreciation | $1,15,000 | |
Net Cash Flow | $1,68,900 |
Solution 3:
Payback Period | ||||
Choose Numerator | / | Choose Denominator | = | Payback Period |
Cost of investment | / | Annual net Cash flow | = | Payback Period |
$4,80,000 | / | $1,68,900 | = | 2.84 |
Solution 4:
Average Investment = ($480000+$20000)/2 = $250,000 | ||||
Accounting rate of Return | ||||
Choose Numerator | / | Choose Denominator | = | Accounting Rate of Return |
Annual Net Income after tax | / | Average Investment | = | Accounting Rate of Return |
$53,900 | / | $2,50,000 | = | 21.56% |
Solution 5:
Chart Values are based on | ||||||
n= | 4 | |||||
i= | 6% | |||||
Cash Flow | Select Chart | Amount | * | PV Factor | = | Present Value |
Annual cash Flow | Present Value of an annuity of 1 | $1,68,900 | * | 3.3872 | = | $5,72,098 |
Residual Value | present value of 1 | $20,000 | * | 0.7629 | = | $15,258 |
Present value of cash inflows | $5,87,356 | |||||
Present value of cash outflows | -$4,80,000 | |||||
Net Present Value | $1,07,356 |
Factor Company is planning to add a new product to its line. To manufacture this product...
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 $500,000 cost with an expected four-year life and a $22,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided....
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 $500,000 cost with an expected four-year life and a $22,000 salvage value. All sales are for cash, and all costs are out-of-pocket. except for depreciation on the new machine. Additional information includes the following (PV of $1. FV of $1. PVA of $1, and EVA of $1 (Use appropriate factor(s) from the tables provided....
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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 $640,000 cost with an expected four-year life and a $36,000 salvage value. All sales are for cash, and all costs are out-of-pocket. except for depreciation on the new machine. Additional information includes the following. (PV of $1. FV of $1. PVA of S1, and FVA of $1) (Use appropriate factor(s) from the tables provided....
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 $640,000 cost with an expected four-year life and a $36,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided....
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