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. (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		$	365,000			$	292,000
Expenses
Direct materials			51,100				36,500
Direct labor			73,000				43,800
Overhead including depreciation			131,400				131,400
Selling and administrative expenses			26,000				26,000
Total expenses			281,500				237,700
Pretax income			83,500				54,300
Income taxes (30%)			25,050				16,290
Net income		$	58,450			$	38,010

Problem 11-2A Part 2

2. Determine each projects payback period.

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. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project Y Project 2 $365,000 $292,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (30%) Net income 51,100 73,000 131,400 26,000 281,500 83,500 25,050 $ 58,450 36,500 43,800 131,400 26,000 237,700 54,300 16,290 $ 38,010 Problem 11-2A Part 2 2. Determine each project's payback period. Payback Period 1 Choose Denominator: Choose Numerator: Il Payback Period Payback period 0 Project Y Project 2 0