Hello, just need help with the annual net cash flow portion. I haven't computed it in this method B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. Theequipment costs $216,000 and has a 12-year life and no salvage value. The expected annual income for each year from thisequipment follows.Sales of new product$ 135,000ExpensesMaterials, labor, and overhead (except depreciation)72,00018,000Depreciation-Equipment13,500Selling, general, and administrative expensesIncome$ 31,500(a) Compute the annual net cash flow.(b) Compute the payback period.(c) Compute the accounting rate of return for this equipment.Complete this question by entering your answers in the tabs below.Required ARequired B Required CCompute the annual net cash flow.Annual Results from InvestmentIncomeSales of new productExpensesMaterials, labor, and overhead (except depreciation)Depreciation EquipmentSelling, general, and administrative expensesIncomeNet cash flow< Required A$$135,00072,00018,00013,50031,500$Required BCash Flow>0

Cash Flows: Cash flows are the cash generated from the operation of the business organization. In…

Answered: (a) Compute the annual net cash flow.

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Finance

(a) Compute the annual net cash flow.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 15P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Hello, just need help with the annual net cash flow portion. I haven't computed it in this method

B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The
equipment costs $216,000 and has a 12-year life and no salvage value. The expected annual income for each year from this
equipment follows.
Sales of new product
$ 135,000
Expenses
Materials, labor, and overhead (except depreciation)
72,000
18,000
Depreciation-Equipment
13,500
Selling, general, and administrative expenses
Income
$ 31,500
(a) Compute the annual net cash flow.
(b) Compute the payback period.
(c) Compute the accounting rate of return for this equipment.
Complete this question by entering your answers in the tabs below.
Required A
Required B Required C
Compute the annual net cash flow.
Annual Results from Investment
Income
Sales of new product
Expenses
Materials, labor, and overhead (except depreciation)
Depreciation Equipment
Selling, general, and administrative expenses
Income
Net cash flow
< Required A
$
$
135,000
72,000
18,000
13,500
31,500
$
Required B
Cash Flow
>
0

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