Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE fill out chart pasted!!!!! Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for

PLEASE fill out chart pasted!!!!!

Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $320,000 investment for new machinery with a four-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 $ 390,000 $ 312,000
Expenses
Direct materials 54,600 39,000
Direct labor 78,000 46,800
Overhead including depreciation 140,400 140,400
Selling and administrative expenses 28,000 28,000
Total expenses 301,000 254,200
Pretax income 89,000 57,800
Income taxes (36%) 32,040 20,808
Net income $ 56,960 $ 36,992

4. Determine each projects net present value using 7% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.)

Project Y
Chart values are based on:
n =
i =
Select Chart Amount x PV Factor = Present Value
= $0
Net present value
Project Z
Chart values are based on:
n =
i =
Select Chart Amount x PV Factor = Present Value
= $0
Net present value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Dr Carl S. Warren, Dr James M. Reeve, Philip E. Fess

9th Edition

032418803X, 978-0324188035

More Books

Students also viewed these Accounting questions