Return to question Problem 11-2A (Static) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $350,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Project Y $ 350,000 157,500 87,500 49,000 $ 56,000 Problem 11-2A (Static) Part 3 3. Compute Project Y's accounting rate of return. Answer is complete but not entirely correct. Numerator: Accounting Rate of Return Denominator: Average investment 56,000 1 $ 350,000 X Income Accounting rate of return 16.0 % Project Y S = Return to question Project Y requires a $350,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within 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 $ 350,000 Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income 157,500 87,500 49,000 $ 56,000 Problem 11-2A (Static) Part 4 4. Determine Project Y's net present value using 8% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Answer is complete but not entirely correct. Project Y Chart values are based on: ns i= 4 8% % Amount 143,500 X Present Value Select Chart Present Value of an Annuity of 1 PV Factor 3.3120 = $ x S 475,272 $ Present value of cash inflows Initial investment Net present value 475,272 350,000 S 167,055 X