Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

kind if urgent, appreciate the help! ! Required information Problem 11-2A Analyzing and computing payback period, accounting rate of return, and net present value LO

kind if urgent, appreciate the help! image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
! 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 $330,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $330,000 investment for new machinery with a five-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 FVA of $1) (Use appropriate factor(s) from the tables provided.) Project Y Project 2 $375,000 $300,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (388) Net income 52,500 37,500 75,000 45,000 135,000 135,000 27,000 27,000 289,500 244,500 85,500 55,500 32,490 21,090 $ 53,010 $ 34,410 Problem 11-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project z Problem 11-2A Part 2 2. Determine each project's payback period. Choose Numerator: Payback Period 1 Choose Denominator: 1 Payback Period Payback period 11 Project Y Project 2 Problem 11-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Denominator: Choose Numerator: Accounting Rato of Return Accounting rate of return Project Project z Problem 11-2A Part 4 4. Determine each project's net present value using 7% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.) Project Y Chart values are based on: n= Select Chart Amount X PV Factor Present Value Net present value Project 2 Chart values are based on: Select Chart Amount PV Factor Presc Value Net present value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Business Statistics

Authors: Ronald M. Weiers

7th Edition

978-0538452175, 538452196, 053845217X, 2900538452198, 978-1111524081

Students also viewed these Accounting questions