Part 1. Applying payback period, accounting rate of return, and net present value (25 points) Brown Co, can invest in one of two alternative projects. Project A requires a $240,000 initial investment for new machinery with a four your life and no alvage value. Project requires a $240,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the Following predicted mulrot. The company uses straight-line depreciation, and cash flows occur evenly throughout each year Project $250,000 Project 1 $200,000 $ $ Ann Amount Sales Expenses Direct materials Direct materials Overhead including depreciation Selling general, and administrative expenses Total expenses Pretax income Income taxes (30%) Income. 35,000 50,000 90,000 18,000 193,000 57.000 17.100 39,900 25,000 30,000 90,000 18.000 163,000 37,000 11.100 25,900 S 5 any a straight line depreciation, and cushi Llows occur evenly throughout each year Pre $200,000 $250,000 5 $ Sales Expense Direct materials Direct materials Overheat including depreciation Selling eral, and administrative expenses Total expenses Pretax income Income (30% Income..... 35.000 50.000 90,000 18.000 193,000 57.000 17,100 39,900 25,000 30,000 90,000 18,000 163,000 37.000 11.100 25.900 5 5 wired 1 Campute och project's a neth flows (Round niet allows to the nearest dollar) 1. Compute each project's payback period (Round the payback period to two decimal) 2h. In the company benement decisions solely on puyhock period, which project will it choose and why? 3a. Computerach projects accounting rate of return (Round the percentage return to one decimal place) 3b. If the company has investment decisions solely on igale of return, which project will it choose and why? 4. Compute each project's present value as the discount rate. For part 4 only me that cash flow occur at each year-end (Round net peut values to the nearest doll) 1b. If the company has investment decisions solely on net prenent value, which project will it choose and why? 5 Identify the project you would recommend to management, explain your choice