Compute the net present value of this investment

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Question - 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 $369,600 with a 4-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment follows. If at least an 9% return on this investment must be earned, compute the net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Sales $ 231,000

Costs

Materials, labor, and overhead (except depreciation on new equipment) 81,000

Depreciation on new equipment 92,400

Selling and administrative expenses 23,100

Total costs and expenses 196,500

Pretax income 34,500

Income taxes (20%) 6,900

Net income $ 27,600

Compute the net present value of this investment.

Reference no: EM132060555

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