Problem 24-2A 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 $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. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Project Y $ 395,000 Project Z $ 316,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses 55,300 79,000 142,200 28,000 39,500 47,400 142,200 28,000 Total expenses 304,500 257,100 Pretax income Income taxes (36%) 90,500 32,580 58,900 21,204 Net income $ 57,920 $ 37,696 Problem 24-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Problem 24-2A Part 2 2. Determine each project's payback period. Payback Period Choose Denominator: Choose Numerator: - Payback Period Payback period / = 0 Project Y Project 2 = 0 Problem 24-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return Accounting rate of return 0 Project Y Project Z