Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please Help will upvote Most Company has an opportunity to invest in one of two new projects. Project Y requires a $340,000 investment for new

Please Help will upvote image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Most Company has an opportunity to invest in one of two new projects. Project Y requires a $340,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $340,000 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 (PV of $1. FV of $1. PVA of S1, and EVA of $1 ) (Use appropriate factor(s) from the tables provided.) Project Y Project $390,000 $312,800 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (283) Tiet income 54,600 39,000 78, Bee 46,800 140,480 140,400 28,000 28,000 301,000 254,200 39,000 57,500 24,920 16,184 $ 64,080 $ 41,616 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Project Y Project $390,000 $312,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (28%) Net income 54,600 39,000 78,000 46,800 140,400 140,400 28,000 28,000 301,200 254,200 89,000 57,800 24,920 16,184 $ 64,880 $ 41,616 Problem 11-2A Part 2 2. Determine each project's payback period. Payback Period Choose Denominator: Choose Numerator: 11 Payback Period Payback period 0 11 Project Y Project z 11 0 Problem 11-2A Part 4 4. Determine each project's net present value using 8% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.) Projecte Chart values are based on Select Chart Amount PV Factor Present Value $ 0 Net present value Project Chart values are based on Select Chart Amount x PV Factor Present Value 0 Select Chart Amount PV Factor Proton Valo $ Net present value Project 2 Chart values are based on: n= 1 = Select Chart Amount X py 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 with AI-Powered 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

Students also viewed these Accounting questions