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.