Net present value

Most Company has an opportunity to invest in one of two new projects. Project Y requires a $330,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $330,000 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 370,000 296,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses 51,800 74,000 133,200 26,000 37,000 44,400 133,200 26,000 Total expenses 285,000 240,600 Pretax income Income taxes (36%) 85,000 30,600 55,400 19,944 Net income $ 54,400 35,456