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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

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

$

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 (40%)

33,400

21,720

Net income

$

50,100image text in transcribed

$

32,580

image text in transcribedimage text in transcribedimage text in transcribed

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