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 $310,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $310,000 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 $1, and EVA of $1 >(Use appropriate factor(s) from the tables provided.) Project Project z Sales $365,000 $292,000 Expenses Direct materials 51, 100 36,500 Direct labor 73,000 43,800 Overhead including depreciation 131,400 131 400 Selling and administrative expenses 26,000 26,000 Total expenses 281 500 237,200 Pretax income 83,500 54,300 Income taxes (28%) 23,380 15, 204 Net income $ 60, 120 $ 39,096 Problem 11-2A Part 4 4. Determine each project's net present value using 9% 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 Required information Net present value Project z Chart values are based on: n 11 Select Chart Amount X PV Factor Present Value Net present value TABLE B.1 Present Value of 1 p=1/(1+i) Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 0.9901 0.9803 0.9706 0.9610 0.9515 0.9420 0.9327 0.9235 0.9143 0.9053 0.8963 0.8874 0.8787 0.8700 0.8613 0.8528 0.8444 0.8360 0.8277 0.8195 0.7798 0.7419 0.7059 0.6717 0.9804 0.9612 0.9423 0.9238 0.9057 0.8880 0.8706 0.8535 0.8368 0.8203 0.8043 0.7885 0.7730 0.7579 0.7430 0.7284 0.7142 0.7002 0.6864 0.6730 0.6095 0.5521 0.5000 0.4529 0.9709 0.9426 0.9151 0.8885 0.8626 0.8375 0.8131 0.7894 0.7664 0.7441 0.7224 0.7014 0.6810 0.6611 0.6419 0.6232 0.6050 0.5874 0.5703 0.5537 0.4776 0.4120 0.3554 0.3066 0.9615 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 0.6496 0.6246 0.6006 0.5775 0.5553 0.5339 0.5134 0.4936 0.4746 0.4564 0.3751 0.3083 0.2534 0.2083 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 0.5847 0.5568 0.5303 0.5051 0.4810 0.4581 0.4363 0.4155 0.3957 0.3769 0.2953 0.2314 0.1813 0.1420 0.9434 0,8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 0.5268 0.4970 0.4688 0.4423 0.4173 0.3936 0.3714 0.3503 0.3305 0.3118 0.2330 0.1741 0.1301 0.0972 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 0.4751 0.4440 0.4150 0.3878 0.3624 0.3387 0.3166 0.2959 0.2765 0.2584 0.1842 0.1314 0.0937 0.0668 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.3405 0.3152 0.2919 0.2703 0.2502 0.2317 0.2145 0.1460 0.0994 0.0676 0.0460 0.9174 0.8417 0.7722 0.7084 0.6499 0.5963 0.5470 0.5019 0.4604 0.4224 0.3875 0.3555 0.3262 0.2992 0.2745 0.2519 0.2311 0.2120 0.1945 0.1784 0.1160 0.0754 0.0490 0.0318 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.3505 0.3186 0.2897 0.2633 0.2394 0.2176 0.1978 0.1799 0.1635 0.1486 0.0923 0.0573 0.0356 0.0221 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.2875 0.2567 0.2292 0.2046 0.1827 0.1631 0.1456 0.1300 0.1161 0.1037 0.0588 0.0334 0.0189 0.0107 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.2149 0.1869 0.1625 0.1413 0.1229 0.1069 0.0929 0.0808 0.0703 0.0611 0.0304 0.0151 0.0075 0.0037 *Used to compute the preenvalue of a known for amount. For example: How much would you need to invest today 10 compounded seminaccumulate 5.000 in 6 year from today? Using the factors of 12 and 12 semiannu penods and semiannual reef 5%, the fact 05568. You would need to in 2.784 today (S000 x 0.3568) TABLE B.2 Future Value of 1 f=(1 + i)" Rato Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0 1 2 3 4 5 6 2 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 1.0000 1.0100 1.0201 1.0303 1.0406 1.0510 1.0615 1.0721 1.0829 1.0937 1.1046 1.1157 1.1268 1.1381 1.1495 1.1610 1.1726 1.1843 1.1961 1.2081 1.2202 1.2824 13478 1.4166 1.4889 1.0000 1.0200 1.0404 1.0612 1.0824 1.1041 1.1262 1.1487 11717 1.1951 1.2190 1.2434 1.2682 1.2936 1.3195 1.3459 1.3728 1.4002 1.4282 1.4568 1.4859 1.6406 1.8114 1.9999 2.2080 1.0000 1.0300 1.0609 1.0927 1.1255 1.1593 1.1941 1.2299 1.2668 1.3048 1.3439 1.3842 1.4258 1.4685 1.5126 1.5580 1.6047 1.6528 1.7024 1.7535 1.8061 2.0938 2.4273 2.8139 3.2620 1.0000 1.0400 1.0816 1.1249 1.1699 1.2167 1.2653 1.3159 13686 1.4233 14802 1.5395 1.6010 1.6651 1.7317 1.8009 1.8730 1.9479 2.0258 2.1068 2 1911 2.6658 3.2434 3.9461 4.8010 1.0000 1.0500 1.1025 1.1576 1.2155 1.2763 1.3401 1.4071 1.4775 1.5513 1.6289 1.7103 1.7959 18856 1.9799 2.0789 2.1829 2.2920 2.4066 2.5270 2.6533 3.3864 43219 5.5160 7.0400 1.0000 1.0600 1.1236 1.1910 1.2625 1.3382 1.4185 1.5036 1.5938 1.6895 1.7908 1.8983 2.0122 2.1329 2.2609 2.3966 2.5404 2.6928 28543 3.0256 3.2071 4.2919 5.7435 7.6861 10.2857 1.0000 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 2 1049 2.2522 2.4098 2.5785 2.7590 29522 3.1588 3,3799 3.6165 3.8697 5.4274 7.6123 10.6766 14.9745 1.0000 1.0800 1.1664 1.2597 1.3605 1.4693 1.5869 1.7138 1.8509 1.9990 2.1589 2.3316 2.5182 2.7196 2.9372 3.1722 3.4259 3.7000 3.9960 4.3152 4.6610 6.8485 10.0627 14.7853 21.7245 1.0000 1.0900 1.1881 1.2950 1.4116 1.5386 1.6771 1.8280 1.9926 2.1719 2.3674 2.5804 2.8127 30658 3.3417 3.6425 3.9703 4.3276 4.7171 5.1417 5.6044 8.6231 13.2677 20.4140 31.4094 1.0000 1.1000 1.2100 1.3310 1.4641 1.6105 1.7716 1.9487 21436 2.3579 25937 2.8531 3.1384 3.4523 3.7975 4,1772 4.5950 5.0545 5.5599 6.1159 6.7275 10.8347 17:4494 28.1024 45.2593 1.0000 1.1200 1.2544 1.4049 1.5735 1.7623 1.9738 22107 2.4760 2.7731 3.1058 3.4785 3.8960 4.3635 4.8871 5.4736 6,1304 6.8660 7.6900 8.6128 9.6463 17.0001 29.9599 52.7996 93.0510 1.0000 1.1500 1.3225 1.5209 1.7490 2.0114 23131 2.6600 3,0590 3.5179 4.0456 4.6524 53503 6.1528 7.0757 81371 9.3576 10.7613 123755 142318 16.3665 329190 66 2118 133.1755 267.8635 "Used to compute the future value of a knowspect amount. For example: What the sound Value of $3.000 veded to compended quarterly for 5 years the factors and I20 20 quarterly periods and quarterly into 20. the 1.4899. The models 15270 53000x14859 P= a to li (1 + i)" TABLE B.3: Present Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 35 40 0.9901 1.9704 2.9410 3.9020 4.8534 5.7955 6.7282 7.6517 8.5660 9.4713 10.3676 11.2551 121337 13.0037 13.8651 14.7179 15.5623 16.3983 17.2260 18.0456 22.0232 25 8077 29.4086 32.8347 0.9804 1.9416 28839 3.8077 4.7135 5.6014 6.4720 7.3255 8.1622 8.9826 9.7868 10.5753 11.3484 12.1062 12.8493 13.5777 14.2919 14.9920 156785 16.3514 19.5235 22 3965 24.9986 27.3555 0.9709 1.9135 2.8286 3.7171 4.5797 5.4172 6.2303 7.0197 7.7861 8.5302 9.2526 9.9540 10.6350 11.2961 11.9379 12.5611 13.1661 13.7535 14.3238 14.8775 17.4131 19.6004 21.4872 23.1148 0.9615 1.8861 2.7751 3.6299 4.4518 5.2421 6.0021 6.7327 7.4353 8.1109 8.7605 9.3851 9.9856 10.5631 11.1184 11,6523 12.1657 12.6593 13.1339 13.5903 15.6221 17.2920 18.6646 19.7928 0.9524 1.8594 2.7232 3.5460 43295 5,0757 5.7864 6.4632 7.1078 7.7217 8.3064 8.8633 9.3936 9.8986 10.3797 10.8378 11.2741 11.6896 12.0853 124622 14.0939 15.3725 16.3742 17.1591 0.9434 1.8334 26730 3.4651 4.2124 4.9173 5.5824 6.2098 6.8017 7.3601 7.8869 8.3838 8.8527 9.2950 9.7122 10.1059 10.4773 10.8276 11.1581 11.4699 12.7834 13.7648 144982 15,0463 0.9346 1.8080 2.6243 3,3872 4.1002 4.7665 5.3893 5.9713 6.5152 7.0236 7.4987 79427 8.3577 8.7455 9.1079 9.4466 9.7632 10.0591 10.3356 10.5940 11.6536 12.4090 12.9477 13.3317 0.9259 1.7833 25771 3.3121 3.9927 4.6229 5.2064 5.7466 6.2469 6.7101 7.1390 7.5361 7.9038 8.2442 8.5595 8.8514 9.1216 9.3719 9.6035 9.8181 10,6748 11.2578 11.6546 11.9246 0.9174 1.7591 2.5313 3.2397 3.8897 4.4859 5.0330 5.5348 5.9952 6.4177 6.8052 7.1607 74869 7.7862 8.0607 8.3126 8.5436 8.7556 8.9501 9.1285 9.8226 10.2737 10.5668 10.7574 0.9091 1.7355 2.4869 3.1699 3.7908 4.3553 4.8684 53349 5.7590 6.1446 6.4951 6.8137 7.1034 7.3667 7.6061 7.8237 8.0216 8.2014 8.3649 8.5136 9.0770 9.4269 9.6442 9.7791 0.8929 1.6901 2.4018 3.0373 3.6048 4.1114 4.5638 4.9676 5.3282 5.6502 5.9377 6.1944 6.4235 6.6282 6.8109 6.9740 7.1196 7.2497 7.3658 7.4694 7.8431 80552 8.1755 8.2438 0.8696 1.6257 2.2832 2.8550 3.3522 3.7845 4.1604 44873 4.7716 5.0188 5.2337 5.4206 5.5831 5.7245 5.8474 5.9542 6.0472 6.1280 6.1982 6,2593 6.4641 6.5660 6.6166 6.6418 Used to calculate the presenta o series of equal payments made the end of each period. Forample: What is the present value of 2.000 per year for 10 years ingan uncual increase of For 10.19%) the PV tacto 64177.52.000 per year of 10 year is the equivalent of 12815 3000.1177) f=[(1 + D)" - 13/1 TABLE B.45 Future Value of an Annuity of 1 Rate Perlod Periods 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 1.0000 2.0100 3.0301 4.0604 5,1010 6.1520 7.2135 8.2857 9.3685 10.4622 11,5668 12.6825 13.8093 14.9474 16.0969 17.2579 18.4304 19.6147 20.8109 22.0190 28.2432 34.7849 41.6603 48.8864 1.0000 1.0000 2.0200 2.0300 3.0604 3.0909 4.1216 4.1836 5.2040 5.3091 6.3081 6.4684 7.4343 7.6625 8,5830 8.8923 9.7546 10.1591 10.9497 11.4639 12.1687 128078 13.4121 14.1920 14.6803 15.6178 15.9739 17.0863 17.2934 18.5989 18.6393 20.1569 20.0121 21.7616 21412323.4144 22.8406 25.1169 24.2974 26.8704 32.0303 36.4593 40.5681 47.5754 49.9945 60.4621 60 4020 75.4013 1.0000 1.0000 1.0000 2.0400 20500 2.0600 3.1216 3.1525 3.1836 4.2465 4.3101 4.3746 5.4163 5.5256 5.6371 6.6330 6.8019 6.9753 7.8983 8.1420 8.3938 9.2142 9.5491 9.8975 10.5828 11.0266 11 4913 12.0061 125779 13.1808 13.4864 14.2068 14.9716 15.0258 15.9171 16.8699 16.6268 17.7130 18.8821 18.2919 19.5986 21.0151 20.0236 21.5786 23.2760 21.8245 23.6575 25.6725 23.6975 25.8404 28.2129 25.6454 28.1324 30.9057 27.6712 30.5390 33.7600 29.7781 33.0660 36.7856 41.6459 47.7271 548645 56,0849 66.4388 79.0582 73.6522 90.3203 111.4348 95.0255 120.7998 154 7620 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 15.7836 17.8885 20.1406 22.5505 25.1290 27.8881 30.8402 33.9990 37.3790 40.9955 63.2490 94.4608 138.2369 199.6351 1.0000 20800 3.2464 45061 5.8666 7.3359 8.9228 10.6366 124876 144866 16,6455 18.9771 21.4953 24 2149 27.1521 30.3243 33.7502 37.4502 41.4463 45.7620 73,1059 113.2832 172.3168 259 0565 1.0000 1.0000 1.0000 2.0900 2.1000 21200 3.2781 3.3100 3.3744 4.5731 4.6410 4.7793 5.9847 6.1051 6.3528 7.5233 7.7156 8.1152 9.2004 9.4872 10,0890 11.0285 11.4359 12.2997 13.0210 13.5795 14.7757 15.1929 15.9374 17.5487 17.5603 18,5312 20 6546 20.1407 21.3843 24.1331 22.9534 24.5227 28.0291 26.0192 27.9750 32.3926 29.3609 31.7725 37.2797 33.0034 35.9497 42.7533 36.9737 40.5447 48.8837 41.3013 45.5992 55.7497 46.0185 51.1591 63.4397 51.1601 57.2750 720524 84.7009 98.3471 133.3339 136.3075 164.4940 241.3327 215.7108 2710244 431,6635 337.8824 4425926 767.0914 1.0000 2.1500 3.4725 4.9934 6.7424 8.7537 11.0668 13.7268 16.7858 20.3037 24,3493 29.0017 34,3519 40.5047 47.5804 55.7175 65,0751 75.8364 88.2118 102.4436 2127930 434.7451 881.1702 1,779.0903 40 Used to calculate the future value of a series of equal payments made at the end of each period. For example: What is the future value of $4.000 per year for 6 years assoming an annual interest rate of For the factors 73359, 54.000 per year for 6 yean accumulate 529.343 (0 (54.900x73159)