Need help with the following accounting problem.
Required information Problem 25-2A Analysis and computation of 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 $350,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $350,000 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 $375,000 $300,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (36%) Net income 52,500 75,000 135,000 27,000 289,500 85,500 30, 780 $ 54,720 37,500 45,000 135,000 27,000 244,500 55,500 19,980 $ 35,520 Problem 25-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Problem 25-2A Part 2 2. Determine each project's payback period. Payback Period Choose Numerator: Denominator: Payback Period Payback period Project Y Project 2 Problem 25-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Denominator: Choose Numerator: Accounting Rate of Return Accounting rate of return Project Y Project Z Required information Problem 25-2A Analysis and computation of 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 $350,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $350,000 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 $375,000 $300,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (36%) Net income 52,500 75,000 135,000 27,000 289,500 85,500 30, 780 $ 54,720 37,500 45,000 135,000 27,000 244,500 55,500 19,980 $ 35,520 Problem 25-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Problem 25-2A Part 2 2. Determine each project's payback period. Payback Period Choose Numerator: Denominator: Payback Period Payback period Project Y Project 2 Problem 25-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Denominator: Choose Numerator: Accounting Rate of Return Accounting rate of return Project Y Project Z
