Required information Problem 11-2A 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 $310,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $310,000 investment for new machinery with a five-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 EVA of $1 (Use appropriate factor(s) from the tables provided.) Project Y Project Z $355,000 Sales $284,000 Expenses Direct materials Direct labor 35,500 49,700 71,000 127,800 25,000 42,600 127,800 25,000 Overhead including depreciation Selling and administrative expenses 230,900 53,100 15,930 Total expenses 273,500 81,500 24,450 Pretax income Income taxes (30%) $ 57,050 $37,170 Net income Problem 11-2A Part 2 2. Determine each project's payback period. Answer is complete but not entirely correct. Payback Period Choose Choose Numerator: Payback Period Denominator: Annual net cash Cost of investment Payback period flow Project Y 136,180 x $ 310,000 2.28 years Project $ 141,565( 310,000 2.19 years 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 Project Y Project Z Determine each project's net present value using 10% as the discount rate. Assume that cash 4. flows occur at each year-end. (Round your intermediate calculations.) Project Y Chart values are based on: n = i = Select Chart Present Value Amount PV Factor X $0 Net present value Project Z Chart values are based on: n = Select Chart Amount PV Factor Present Value X $0 = Net present value