Exercise 24-13 (Algo) Net present value of an annulty LO P3 B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $377,600 and has a 10-year life and no salvage value. B2B Company requires at least an 9% return on this investment. The expected annual income for each year from this equipment follows: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income (a) Compute the net present value of this investment. $ 236,000 83,000 37,760 23,600 $ 91,640 (b) Should the investment be accepted or rejected on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals and other final answers to the nearest whole dollar.) Years 1 through 10 Annual Net Cash Flows Present Value of Annuity at 9% Present Value of Net Cash Flows $ 0 Net present value < Required A Required B >

Exercise 24-13 (Algo) Net present value of an annulty LO P3 B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $377,600 and has a 10-year life and no salvage value. B2B Company requires at least an 9% return on this investment. The expected annual income for each year from this equipment follows: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Equipment Selling, general, and administrative expenses Income (a) Compute the net present value of this investment. $ 236,000 83,000 37,760 23,600 $ 91,640 (b) Should the investment be accepted or rejected on the basis of net present value? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals and other final answers to the nearest whole dollar.) Years 1 through 10 Annual Net Cash Flows Present Value of Annuity at 9% Present Value of Net Cash Flows $ 0 Net present value < Required A Required B >

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 28BEB: Net Present Value Talmage Inc. has just completed development of a new printer. The new product is...

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