Most Company has an opportunity to invest in one of two new projects. Project Y requires a $310,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $310,000 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. (FV of $1, PV of $1, FVA of $1 and PVA 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 (28%) 23,940 15,540 Net income $ 61,560 $ 39,960

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 7% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.)