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Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $499,000 cost with an expected four-year life and a $15,000 salvage are for cash, and all costs are out-of-pocket, except for depreciation on the new machine Additional information includes the following (FV of $1. PV of $1. EVA of $1 and PVA of S1) (Use appropriate factor(s) from the tables provided.) Expected annual sales of new product Expected annual costs of new product $1.880,000 Direct materials Direct labor 470,000 678,000 Overhead (excluding straight -ine depreciation on new machine) 335,000 Selling and administrative expenses Income taxes 170,000 36% Required: 1. Compute straight-line depreciation for each year of this new machine's life ne 2. Determine expected net income and net cash flow for each year of this machine's life xpected Net Income Revenuers Expenses Expected Net Cash Flow 3. Compute this machine's payback period, assurning that cash flows occur evenly throughout each year Payback Period - Payback Period Payback period Numerator: Choose Denominator:p 4. Compute this machine's accounting rate of return, assuming that income is eaned evenly throughout each year Accounting Rate of Return Choose Denominator: Choose Numerator Accounting Rate of Return Accounting rate of return for this imachine using a diacount rate of 0% and assuming that cash occur at each year end (Hint Salvage value is a cash inflow at the end of the assets life.) (Do not 5. Compute the net present value machine u round intermediate calculations Chart Values are Based on: lect Chart PV Factor- Present Value ash Flow Annual cash Bow Residual value Net present value

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