Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. winthrop company has an opportunity to manufacture

Winthrop Company has an opportunity to manufacture and sell a new product for a five-year...

60.1K

Verified Solution

Question

Accounting

image
Winthrop Company has an opportunity to manufacture and sell a new product for a five-year period. To pursue this opportunity, the company would need to purchase a piece of equipment for $155,000. The equipment would have a useful life of five years and zero salvage value. It would be depreciated for financial reporting and tax purposes using the straight-line method. After careful study. Winthrop estimated the following annual costs and revenues for the new product: Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $380, eee $210,000 $ 88,000 The company's tax rate is 30% and its after-tax cost of capital is 18% Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables, Required: 1. Calculate the annual income tax expense that will arise as a result of this investment. 2. Calculate the net present value of this investment opportunity. (Round your final answer to nearest whole dollar.) 1. Annual income tax expense 2. Net present value

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Psychology
1.2K views

What are three new sources of stress for today’s police officers. What are some healthy coping...

Accounting
1.2K views

Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal A                     Proposal B             Proposal C Initial investment…………………………….................$60,000                           $60,000                  $60,000 Cash flow...

Geometry
1.2K views

The given line markings show how the roads in a town are related to each...

Basic Math
1.2K views

Express the following equations in logarithmic form:(a) 4 = 256 is equivalent to the logarithmic...

Calculus
1.2K views

The graph of the function f(x) = - 3 ? can be obtained from the...

Algebra
1.2K views

Now we find the optimum sequence of the 6 jobs in two machines H and...

Accounting
1.2K views

Squeaky Shine provides car washing services in Jersey City, New Jersey. A three-month pass for...

Accounting
1.2K views

Crane Limited is a Niagara-on-the-Lake, Ontario-based winery producing blended, premium, and ultra-premium wines, which are...

Accounting
1.2K views

On March 5, 2013, the Dow Jones Industrial Average set a new high. The index...

Accounting
1.2K views

Should fresh start accounting be eliminated? Why or why not? (Please no hand writing, thank...

Finance
1.2K views

Do you think using APR instead of EAR is misleading and unethical?

Accounting
1.2K views

Create chart for A,B,C,D with account title and explanation, debit and credit