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 six-year life and no salvage value. Project Z requires a $345,000 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. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1.

Compute each projects annual expected net cash flows.

2.

Determine each projects payback period.

3.

Compute each projects accounting rate of return.

4.

Determine each projects net present value using 8% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.

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 six-year life and no salvage value. Project Z requires a $345,000 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. (FV of $1, PV of $1. FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) ProjectYProject Z $400,000 315,000 Sales Direct materials Direct labor Overhead including depreciation Selling and administrative expenses 56,000 80,000 144,000 29,000 39,375 47,250 141,750 28,000 Total expenses 309,000 256,375 Pretax income Income taxes (36%) 91,000 32,760 58,625 21,105 Net income $ 58,240 37,520