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IS piduct, the company od a $20.000 salvage on the new machine PROBLEM SET B Cortino Company is planning to add a new product to its line. To min u le needs to buy a new machine at a $300,000 cost with an expected four-year life and value. All sales are for cash and all costs are out-of-pocket, except for depreciation on the Additional information includes the following. $1,150,000 Problem 26-1B Computing payback period. accounting rate of return, and net present value P1 P2 P3 Expected annual sales of new product.. Expected annual costs of new product Direct materials ..... Direct labor... Overhead (excluding straight-line depreciation on new machine)... Selling and administrative expenses....... Income taxes ... 300.000 420,000 210,000 100.000 30% Required 1. Compute straight-line depreciation for each year of this new machine's life. (Round depreciativa amounts to the nearest dollar.) 2. Determine expected net income and net cash flow for each year of this machine's life. (Round answers to the nearest dollar.) 3. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year (Round the payback period to two decimals.) 4. Compute this machine's accounting rate of return, assuming that income is earned evenly throughou each year. (Round the percentage return to two decimals.) 5. Compute the net present value for this machine using a discount rate of 7% and assuming that case flows occur at each year-end. Hint: Salvage value is a cash inflow at the end of the asset's lite. Check (4) 2188% (5) $70.915

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