Accounting rate of return for Project Y is 33.9% and 22% for project Z. Payback period is 2.38 years for Project Y and 2.25 years project Z

Required information Problem 11-2A Analyzing and computing payback period, accounting rate of return, and net present value LO P1, P2, P3 [The following information applies to the questions displayed below.) Most Company has an opportunity to invest in one of two new projects. Project Y requires a $345.000 investment for new machinery with a four-yex life and no salvage value. Project Z requires a $345,000 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. (PV of $1. FV of $1. PVA of $1, and EVA of $1 ) (Use appropriate factor(s) from the tables provided.) Project Y Project 2 Sales $365,000 $292,000 Expenses Direct materials 51,100 36,500 Direct labor 73,000 43,800 Overhead including depreciation 131,400 131,400 Selling and administrative expenses 26,000 26,000 Total expenses 281,500 237,700 Pretax income 83,500 54,300 Income taxes (308) 25.050 16,290 $ 58,450 $ 38,010 Net income UUUUUUUUUUUUUUITS . Required information Project Y Chart values are based on: f4 na i= Amount X PV Factor Select Chart Present Value ok mt ences Net present value Project z Chart values are based on: n = Amount PV Factor Present Value Select Chart Net prosent value W TABLE B.1 Present Value of 1 p=1/(1+i) Rate Periods 1% 2x 3% 4% 5% 6% 7% 8% 10% 12% 15% 1 2 3 4 5 6 7 8 9 10 12 13 14 15 16 17 18 19 20 25 30 35 40 0.9901 0.9803 0.9705 0.9610 0.9515 0.9420 09327 0.9235 0.9143 0.9053 0.8963 0.8874 0.8787 0.8700 0.861 0.8528 0.8444 0.8360 0.8277 0.8195 0.7798 0.7419 0.7059 0.6717 0.9804 0.9612 0.9423 0.9228 0.9057 0.8880 0.8706 0.8535 0.8368 0.8203 0.8043 0.7885 0.7730 0.7579 0.7430 0.7284 0.7142 0.7002 0.6864 0.6730 0.6095 0.5521 0.5000 0.4529 0.9709 0.9426 0.9151 0.8885 0.8626 0.8375 0.8131 0.7894 0.7664 0.7441 0.7224 0.7014 0.6810 0.6611 0.6419 0.6232 0.6050 0.5874 0.5703 0.5537 0.4776 0.4120 0.3554 0.3066 0.9615 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 0.6496 0.6246 0.6006 0.5775 0.5553 0.5339 0.5134 0.4936 0.4746 0.4564 0.3751 0.3083 0.2534 0.2083 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 0.5847 0.5568 0.5303 0.5051 0.4810 0.4581 0.4363 0.4155 0.3957 0.3769 0.2953 0.2314 0.1813 0.1420 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 0.5268 0.4970 0.4688 0.4423 0.4173 0.3936 0.3714 0.3503 0.3305 0.3118 0.2330 0.1741 0.1301 0.0972 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 0.4751 0.4440 0.4150 0.3878 0.3624 0.3387 0.3166 0.2959 0.2765 0.2584 0.1842 0.1314 0.0937 0.0668 0.9259 0.8573 0.7938 0.7350 0.6805 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.3405 0.3152 0.2919 0.2703 0.2502 0.2317 0.2145 0.1460 0.0994 0.0676 0.0460 0.9174 0.8417 0.7722 0.7084 0.6499 0.5963 0.5470 0.5019 0.4604 0.4224 0.3875 0.3555 0.3262 0.2992 0.2745 0.2519 0.2311 0.2120 0.1945 0.1784 0.1160 0.0754 0.0490 0.0318 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.3505 0.3186 0.2897 0.2633 0.2394 0.2176 0.1978 0.1799 0.1635 0.1485 0.0923 0.0573 0.0356 0.0221 0.8929 0.7972 0.7118 0.6355 0.5674 0_5056 0.4523 0.4039 0.3606 0.3220 0.2875 0.2567 0.2292 0.2046 0.1827 0.1631 0.1456 0.1300 0.1161 0.1037 0.0588 0.0334 0.0189 0.0107 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.2149 0.1869 0.1625 0.1413 0.1229 0.1069 0.0929 0.0808 0.0703 0.0611 0.0304 0.0151 0.0075 0.0037 "Used to compute the present value of a known future mount. For ample: How much would you need to invest today 10 compounded many to accumulate 55.000 in 6 years from today? Using the factors of 12 undi (12 semana periods and manual rate of 5), the factor is 0.5568. You would need to invest $2.781 day (55.000x 0.55682 TABLE B.2 Future Value of 1 f= (1 + i)" Rate Periods 1% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 1.0000 1.0100 1.0201 1.0303 1.0406 1.0510 1.0615 1.0721 1.0829 1.0937 1.1046 1.1157 1.1268 1.1381 1.1495 1.1610 1.1726 1.1843 1.1961 1.2081 1.2202 1.282 1.3478 1.4166 1.4889 1.0000 1.0200 1.0404 1.0612 1.0824 1.1041 1.1262 1.1487 1.1717 1.1951 1.2190 1.2434 1.2682 1.2936 1.3195 1.3459 1.3728 1.4002 1.4282 1.4568 1.4859 1.640 1.8114 1.9999 2.2080 1.0000 1.0300 1.0609 1.0927 1.1255 1.1593 1.1941 1.2299 1.2668 1.3048 1.3439 1.3842 1.4258 1.4685 1.5126 1.5580 1.6047 1.6528 1.7024 1.7535 1.8061 2.0938 2.4273 2.8139 3.2620 1.0000 1.0400 1.0816 1.1249 1.1699 1.2167 1.2653 1.3159 1.3686 1.4233 1.4802 1.5395 1.6010 1.6651 1.7317 1.8009 1.8730 1.9479 2.0258 2.1068 2.1911 2.6658 3.2434 3.9461 4.8010 1.0000 1.0500 1.1025 1.1576 1.2155 1.27! 1.3401 1.4071 1.4775 1.5513 1.6289 1.7103 1.7959 1.8856 1.9799 2.0789 2.1829 2.2920 2.4066 2.5270 2.6533 3.3864 4.3219 5.5160 7.0400 1.0000 1.0600 1.1236 1.1910 1.2625 1.3382 1.4185 1.5036 1.5938 1.6895 1.7908 1.8983 2.0122 2.1329 2.2609 2.3966 2.5404 2.6928 2.8543 3.0256 3.2071 4.2919 5.7435 7.6861 10.2857 1.0000 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 2.1049 2.2522 2.4098 2.5785 2.7590 2.9522 3.1588 3.3799 3.6165 3.8697 5.4274 7.6123 10.6766 14.9745 1.0000 1.0800 1.1664 1.2597 1.3605 1.4693 1.5869 1.7138 1.8509 1.9990 2.1589 23316 2.5182 2.7196 2.9372 3.1722 3.4259 3.7000 3.9960 4.3157 4.6610 6.8485 10.0627 14.7853 21.7245 1.0000 1.0900 1.1881 1.2950 1.4116 1.5386 1.6771 1.8280 1.9926 2.1719 2.3674 2.5804 2.8127 3.0658 3.3417 3.6425 3.9703 4.3276 4.7171 5.1417 5.6044 8.6231 13.2677 20.4140 31.4094 1.0000 1.1000 1.2100 1.3310 1.4641 1.6105 1.7716 1.9487 2.1436 2.3579 2.5937 2.8531 3.1384 3.4523 3.7975 4.1772 4.5950 5.0545 5.5599 6.1159 6.7275 10.8347 17.4494 28. 1024 45.2593 1.0000 1.1200 1.2544 1.4049 1.5735 1.7623 1.9738 2.2107 2.4760 2.7731 3.1058 3.4785 3.8960 4.3635 4.8871 5.4736 6.1304 6.8660 7.6900 8.6128 9.6463 17.0001 29.9599 52.7996 93.0510 1.0000 1.1500 1.3225 1.5209 1.7490 2.0114 2.3131 2.6600 3.0590 3.5179 4.0456 4.6524 5.3503 6.1528 7.0757 8.1371 9.3576 10.7613 12.3755 14.2318 16.3665 32.9190 66.2118 133.1755 267.8635 "Used to compute the future value of a known present amount. For example: What is the accumulated value of $1,000 invested today at 85 compounded quarterly for 5 years? Using the factors of 20 und 2500 quarterly periods and a quarterly interest rate of 2), the factor is 14859. The accumulated value is 54,457.70 (53000 x 1.4859). pa 1- a to 1 (1 + i)" TABLE B.3: Present Value of an Annuity of 1 Rate Periods 1% 6% 7% 8% 9% 10% 12% 15% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 0.9901 1.9704 29410 3.9020 4.8534 5.7955 6.7282 7.6517 8.5660 9.4713 10.3676 11.2551 12.1337 13.0037 13.8651 14.7179 15.5623 16.3983 17.2260 18.0456 22.0232 25.8077 29.4086 32.8347 0.9804 1.9416 2.8839 3.8077 4.7135 5.6014 6.4720 7.3255 8.1622 8.9826 9.7868 10.5753 11.3484 12.1062 12.8493 13.5777 14.2919 14.9920 15.6785 16.3514 19.5235 22 3965 24.9986 27.3555 0.9709 1.9135 2.8286 3.7171 4.5797 5.4172 6.2303 7.0197 7.7861 8.5302 9.2526 9.9540 10.6350 11.2961 11.9379 12.5611 13.1661 13.7535 14.3238 14.8775 17.4131 19.6004 21.4872 23.1148 0.9615 1.8861 2.7751 3.6299 4.4518 5.2421 6.0021 6.7327 7.4353 8.1109 8.7605 9.3851 9.9856 10.5631 11.1184 11.6523 12.1657 12.6593 13.1339 13.5903 15.6221 17.2920 18.6646 19.7928 0.9524 1.8594 2.7232 3.5460 43295 5.0757 5.7864 6.4632 7.1078 7.7217 8.3064 8.8633 9.3936 9.8986 10.3797 10.8378 11.2741 11.6896 12.0853 12.4622 14.0939 15.3725 16.3742 17.1591 0.9434 1.8334 26730 3.4651 4.2124 4.9173 5.5824 6.2098 6.8017 7.3601 7.8869 8.3838 8.8527 9.2950 9.7122 10.1059 10.4773 10.8276 11.1581 11.4699 12.7834 13.7648 14.4982 15.0463 0.9346 1.8080 2.6243 3.3872 4.1002 4.7665 5.3893 5.9713 6.5152 7.0236 7.4987 7.9427 8.3577 8.7455 9.1079 9.4466 9.7632 10.0591 10.3356 10.5940 11.6536 12.4090 12.9477 13.3317 0.9259 1.7833 2.5771 3.3121 3.9927 4.6229 5.2064 5.7466 6.2469 6.7101 7.1390 7.5361 7.9038 8.2442 8.5595 8.8514 9.1216 9.3719 9.6036 9.8181 10.6748 11.2578 11.6546 11.9246 0.9174 1.7591 2.5313 3.2397 3.8897 4.4859 5.0330 5.5348 5.9952 6.4177 6.8052 7.1607 7.4869 7.7862 8.0607 8.3126 8.5436 8.7556 8.9501 9.1285 9.8226 10.2737 10.5668 10.7574 0.9091 1.7355 2.4869 3.1699 3.7908 4 3553 4.8684 5.3349 5.7590 6.1446 6.4951 6.8137 7.1034 7.3667 7.6061 7.8237 8.0216 8.2014 8.3649 8.5136 9.0770 9.4269 9.6442 9.7791 0.8929 1.6901 24018 3.0373 3.6048 4.1114 4.5638 4.9676 5.3282 5.6502 5.9377 6.1944 6.4235 6.6282 6.8109 6.9740 7.1196 7.2497 7.3658 7.4694 7.8431 8.0552 8.1755 8.2438 0.8696 1.6257 2.2832 2.8550 3.3522 3.7845 4.1604 4.4873 4.7716 5.0188 5.2337 5.4206 5.5831 5.7245 5.8474 5.9542 6.0472 6.1280 6.1982 6.2593 6.4641 6.5660 6.6166 6.6418 Used to calculate the present value of a series of equal payments made at the end of each period. For example: What is the present value of $2.000 per year for 10 years assuming an nual interest rate of 97 For 10,195), the PV factor is 64177.52,000 per year for 10 years is the equivalent of $12.835 sody (52.000 X 6.4177) f=[(1 + i)" - 13/ TABLE B.4 Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 6% 7% 8% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15 17 18 19 20 25 30 35 10 1.0000 1.0000 1.0000 20100 2.0200 2.0300 3.0301 3.0604 3.0909 4,0604 4.1216 4.1836 5.1010 5.2040 53091 6.1520 6.3081 6.4684 7.2135 7.4343 7.6625 8.2857 8.5830 8.8923 9.3685 9.7546 10.1591 10.4622 10.9497 11.4639 11.5668 12.1687 12.8078 12.6825 13.4121 14.1920 13 8093 14 6803 15.6178 14.9474 15.9739 17.0863 16.0969 17.2934 18.5989 17.2579 18.6393 20.1569 18.4304 20.0121 21.7616 19,6147 21.4123 23.4144 20.8109 22.8406 25.1169 22.0190 24.2974 26.8704 28.2432 32.0303 36.4593 34.7849 40.5681 47.5754 41.6603 49.994560.4621 48.8864 60.4020 75.4013 1.0000 1.0000 2.0400 2.0500 3.1216 3.1525 4.2465 4.3101 5.4163 5.5256 6.6330 6.8019 7.8983 8.1420 9.2142 9.5491 10.5828 11.0266 12.0061 12.5779 13.4864 14.2068 15.0258 15.9171 16 6268 17.7130 18.2919 19.5986 20.0236 21.5786 21.8245 23.6575 23.6975 25.8404 25.6454 28.1324 27.6712 30.5390 29.7781 33.0660 41.6459 47.7271 56.0849 66.4388 73.6522 90.3203 95.0255 120.7998 1.0000 2.0600 3.1836 43746 5.6371 6.9753 8.3938 9.8975 11.4913 13.1808 14.9716 16.8699 18.8821 21.0151 23.2760 25.6725 28.2129 30.9057 33.7600 36.7856 54.8645 79.0582 1114348 154.7620 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 15.7836 17.8885 20.1406 22.5505 25.1290 27.8881 30.8402 33.9990 37.3790 40.9955 63.2490 94.4608 138.2369 199.6351 1.0000 2.0800 3.2464 4.5061 5.8666 7.3359 8.9228 10.6366 12.4876 14.4866 16.6455 18.9771 21.4953 24.2149 27.1521 30.3243 33.7502 37.4502 41.4463 45.7620 73.1059 113.2832 172.3168 259.0565 9% 10% 12% 15% 1.0000 1.0000 1.0000 1.0000 2.0900 2.1000 2.1200 2.1500 3.2781 3.3100 3.3744 3.4725 4.5731 4.6410 4.7793 4.9934 5.9847 6.1051 6.3528 6.7424 7.5233 7.7156 8.1152 8.7537 9.2004 9.4872 10.0890 11.0668 11.0285 11.4359 12.2997 13.7268 13.0210 13.5795 14.7757 16.7858 15. 1929 15.9374 17.5487 20.3037 17.5603 18.5312 20.6546 24.3493 20.1407 21.3843 24.1331 29.0017 22.9534 24.5227 28.0291 34.3519 26.0192 27.9750 32 3925 40.5047 29.3609 31.7725 37.2797 47.5804 33.0034 35.9497 42.7533 55.7175 36.9737 40.5447 48.8837 65.0751 41.3013 45.5992 55.7497 75.8364 46.0185 51.1591 63.4397 88.2118 51.1601 57.2750 72.0524 102.4436 84.7009 98.3471 133.3339 212.7930 135.3075 164.4940 241.3327 434.7451 215.7108 271.0244431.6635 881.1702 337.8824 442.5926 7670914 1,7790903 Used to calculate the future value of a series of equal payments made at the end of each period. For example: What is the future value of 54.000 per year for years suming meeste of For the factor is 7.3359.54.000 per year for 6 years accumulates to 5.29.343.00 54000 x 7.3359)