24-2B Analyzing and computing payback period, accounting rate of return, and net present value P1 P2 P3 Aikman Company has an opportunity to invest in one of two projects. Project A requires a $240,000 investment for new machinery with a four-year life and no salvage value. Project B also requires a $240,000 investment for new machinery with a three-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. sales project a. $250,000 project b. 200,000. EXPENSES: direct materials project a. $35,000 project b. 25,000 direct labor project a. 50,000 project b. 30,000. Overhead including depreciation project a. 90,000 project b. 90,000 selling and admin expenses project a. 18,000 project b 18,000 total selling expenses project a 193,000 project b. 163,000 Pretax income project a. 57,000 project b 37,000 income taxes (30%) project a. 17,100 project b. 11,100 Net income project a. 39,900 project b. 25,900. Required 1. Compute each project's annual expected net cash flows. (Round net cash flows to the nearest dollar.) 2. Determine each project's payback period. (Round the payback period to two decimals.) Check For Project A: (2) 2.4 years 3. Compute each project's accounting rate of return. (Round the percentage return to one decimal.) (3) 33.3% 4. Determine each project's net present value using 8% as the discount rate. For part 4 only, assume that cash flows occur at each year-end. (Round net present values to the nearest dollar.) (4) $90,879 Analysis Component 5. Identify the project you would recommend to management and explain your choice