B2b co is considering the purchase of equipment that would

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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 $382,400 with a 5-year life and no salvage value. It will be depreciated on a straight-line basis. B2B Co. concludes that it must earn at least a 10% return on this investment. The company expects to sell 152,960 units of the equipments product each year. The expected annual income related to 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	$	239,000
Costs
Materials, labor, and overhead (except depreciation)		84,000
Depreciation on new equipment		76,480
Selling and administrative expenses		23,900

Total costs and expenses		184,380

Pretax income		54,620
Income taxes (30%)		16,386

Net income	$	38,234

Compute the net present value of this investment.

Reference no: EM13577414

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