Required information Problem 11-2A Analyzing and computing 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 $330,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $330,000 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 FVA of $1 ) (Use appropriate factor(s) from the tables provided.) Project Y Project z $380,000 $304,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (36%) Net income 53,200 76,000 136,800 27,000 293,000 87,000 31,320 $ 55,680 38,000 45,600 136,800 27,000 247,400 56,600 20,376 $ 36,224 Problem 11-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Problem 11-2A Part 2 2. Determine each project's payback period. Payback Period 1 Choose Denominator: Choose Numerator: = Payback Period Payback period / Il = Project Y Project Z II Problem 11-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Numerator: / Choose Denominator: = Accounting Rate of Return / II Accounting rate of return Project Y Project Z 4. Determine each project's net present value using 6% 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 = Select Chart Amount x PV Factor = Present Value Net present value Project Z Chart values are based on: n Select Chart Amount X PV Factor = Present Value Net present value