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explain calculation of pv B2B Co. is considering the purchase of equipment that would...

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Accounting

imageexplain calculation of pv

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 $376,000 with a 4-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 150,400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 235,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income 82,000 94,000 23,500 199,500 35,500 10,650 $ 24,850 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.) Chart Values are Based on: n i = 8% Select Chart Present Value of an Annuity of 1 Amount X 118,850 X PV Factor 0.9259 - $ Present Value $ 110,043 Present value of cash inflows Present value of cash outflows $ 110,043 376,000 306,793 Net present value $

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