Wellace Corp. has an annuity to invest in one of two new projects. Project v requires a 350,000 investment for new machinery with a four-year life and no salvage value. Project W also requires a 350,000 investment but the new machinery has a three- year life and no salvage value. The two projects yield the following predicted annual result. The company uses straight-line depreciation, and cash flow occurs evenly throughout each year.

1. Compute each project? annual expected net cash flows. Round net cash flow to the nearest dollar)

2. Determine each project payback period. Round the payback period to two decimals)

3. Compute each project accounting rate of return. Round the percentage return to decimal.

4. Determine each project?s net present value using 8% as the discount rate for part 4 only, assume that cash flows occurs at each year ?year end( round net present values to the nearest dollar)

5. Identify the project would you recommend to manager to management and explain your choice.

Sales Expenses Direct materials Direct labor Overhead (inc.dep) Selling and admin Total expenses Pretax income Income taxes (30%) Net income Project V 350,000 49,000 70,000 126,000 25,000 270,000 80,000 24,000 56,000 project W 280,000 35,000 42,000 126,000 25,000 228,000 52,000 15,600 36,400