Reference no: EM132962189
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 $371,200 with a 6-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 148,480 units of the equipment's product each year. The expected annual income related to this equipment follows.
Sales$232,000
Costs Materials, labor, and overhead (except depreciation on new equipment) 81,000
Depreciation on new equipment 61,867
Selling and administrative expenses 23,200
Total costs and expenses 166,067
Pretax income 65,933
Income taxes (30%) 19,780
Net income$46,153
Problem 1: If at least an 8% 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.)