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 six-year life and no salvage value. Project Z requires a $335,000 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
Sales		$	375,000			$	300,000
Expenses
Direct materials			52,500				37,500
Direct labor			75,000				45,000
Overhead including depreciation			135,000				135,000
Selling and administrative expenses			27,000				27,000
Total expenses			289,500				244,500
Pretax income			85,500				55,500
Income taxes (36%)			30,780				19,980
Net income		$	54,720			$	35,520

1. Compute each project's annual expected net cash flows. Project Y $ 54,720 Project Z $ 35,520 Net income Depreciation expense Expected net cash flows 2. Determine each project's payback period. Payback Period Choose Numerator: 7 Choose Denominator: = Cost of investment / Annual net cash flow = Payback Period Payback period Project Y Project Z 3. Compute each project's accounting rate of return. Accounting Rate of Return 7 Choose Denominator: Choose Numerator: Accounting Rate of Return Accounting rate of return = Project Y Project Z Annual after-tax net income 54,720 $ 35,520 1 Annual average investment 1 / 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: i = 8% Amount x PV Factor - Present Value Select Chart Present Value of an Annuity of 1 Present value of cash inflows Present value of cash outflows Net present value Project Z Chart values are based on: 8% Amount * PV Factor - Present Value Select Chart Present Value of an Annuity of 1 Present value of cash inflows Present value of cash outflows Net present value