Most Company has an opportunity to invest in one of two new projects. Project Y requires a $335,000 investment for new machinery with a four-year life and no salvage value.

Required information Problem 26-2A 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 $335.000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $335.000 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 FVA of $1 ) (Use appropriate factor(s) from the tables provided.) Project Y Project Z $370,000 $296,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (36%) Net income 51,800 74,000 133,200 26,000 285,000 85,000 30,600 $ 54,400 37,000 44,400 133,200 26,000 240,600 55,400 19,944 $ 35,456 Problem 26-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Problem 26-2A Part 2 2 Determine each project's payback period. Payback Period 7 Choose Denominator: Choose Numerator: = = Payback Period Payback period Project Y Project Z Problem 26-2A Part 3 3. Compute each project's accounting rate of return Accounting Rate of Return 1 Choose Denominator: Choose Numerator: Accounting Rate of Return Accounting rate of return Project Y Project Z 10 UD LIIC VIDLUUTILIUIC MODUITI U LUDI TTU VLLUI UL CULIT YGUI-CIU. 7. DOLCITIC CULII PIVCLL STICL PICOCHIL Vuiu um your Intermedlate calculations. Project Y Chart values are based on: Select Chart Amount X PV Factor = Present Value Net present value Project Z Chart values are based on: Select Chart Amount X PV Factor = Present Value Net present value