Most Company has an opportunity to invest in one of two new projects. Project Y requires a $315,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $315,000 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 Z $380,000 $304,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (30%) Net income 53,200 76,000 136,800 27,000 293,000 87,000 26,100 $ 60,900 38,000 45,600 136,800 27,000 247,400 56,600 16,980 $ 39,620 Problem 11-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project 2 60,900 $ 39,620 Net income $ Depreciation expense Expected net cash flows $ 126,640 $ 120,752 Most Company has an opportunity to invest in one of two new projects. Project Y requires a $315,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $315,000 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 Z $380,000 $304,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (30%) Net income 53,200 38,000 76,000 45,600 136,800 136,800 27,000 27,000 293,000 247,400 87,000 56,600 26,100 16,980 $ 60,900 $ 39,620 Problem 11-2A Part 2 2. Determine each project's payback period. Choose Numerator: Payback Period 1 Choose Denominator: 1 Annual net cash flow Cost of investment Payback Period Payback period 0 Project Y Project Z 0 Most Company has an opportunity to invest in one of two new projects. Project Y requires a $315,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $315,000 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 Z $380,000 $304,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (30%) Net income 53,200 76,000 136,800 27,000 293,000 87,000 26,100 $ 60,900 38,000 45,600 136, 800 27,000 247,400 56,600 16,980 $ 39,620 Problem 11-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Numerator: 1 Choose Denominator: Accounting Rate of Return Accounting rate of return Project Y Project Z Most Company has an opportunity to invest in one of two new projects. Project Y requires a $315.000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $315.000 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 Z $380,000 $304,880 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (30%) Net income 53,280 76,880 136,880 27, eee 293,80 87,880 26,180 $ 60, 980 38,eee 45,689 136,880 27,880 247, 480 56,689 16,980 $ 39,620 Problem 11-2A Part 4 4. Determine each project's net present value using 8% as the discount rate. Assume that cash flows occur at each year-end. (Round your Intermediate calculations.) Project Y Chart values are based on: Select Chart Amount PV Factor Present Value Net present value Project Z Chart values are based on: n = Select Chart Amount PV Factor Present Value Net present value