Solution 1:
Straight line depreciation = ($880000 - $60000) / 4 = $205,000
Solution 2:
Expescted Net Income | ||
Revenues: | ||
Sales | $28,40,000 | |
Expenses: | ||
Direct Materials | $5,20,000 | |
Direct Labor | $7,12,000 | |
Overhead excluding depreciation | $7,36,000 | |
Selling and administrative expenses | $2,00,000 | |
Straight line depreciation | $2,05,000 | |
Total Expenses | $23,73,000 | |
Income before taxes | $4,67,000 | |
Income tax expense (30%) | $1,40,100 | |
Net Income | $3,26,900 | |
Expected net Cash Flow | ||
Net Income | $3,26,900 | |
Add: Straight line Depreciation | $2,05,000 | |
Net Cash Flow | $5,31,900 |
Solution 3:
Payback Period | ||||
Choose Numerator | / | Choose Denominator | = | Payback Period |
Cost of investment | / | Annual net Cash flow | = | Payback Period |
$8,80,000 | / | $5,31,900 | = | 1.65 |
Years |
Solution 4:
Accounting rate of Return | ||||
Choose Numerator | / | Choose Denominator | = | Accounting Rate of Return |
Annual Net Income after tax | / | Average Investment | = | Accounting Rate of Return |
$3,26,900 | / | $4,70,000 | = | 69.55% |
Solution 5:
Chart Values are based on | ||||||
n= | 4 | |||||
i= | 3% | |||||
Cash Flow | Select Chart | Amount | * | PV Factor | = | Present Value |
Annual cash Flow | Present Value of an annuity of 1 | $5,31,900 | * | 3.7171 | = | $19,77,125 |
Residual Value | present value of 1 | $60,000 | * | 0.8885 | = | $53,310 |
Present value of cash inflows | $20,30,435 | |||||
Present value of cash outflows | -$8,80,000 | |||||
Net Present Value | $11,50,435 |
Factor Company is planning to add a new product to its line. To manufacture this product, the com...
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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 $1, and FVA of $1) (Use appropriate factor(s) from the tables provided....
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actor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine $880,000 cost with an expected four-year life and a $60,000 salvage value. All sales are for cash, and all costs are out-of-pocket, xcept 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. Round PV factor...