[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 $315,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $315,000 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. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

	Project Y					Project Z
Sales		$	360,000				$	288,000
Expenses
Direct materials			50,400					36,000
Direct labor			72,000					43,200
Overhead including depreciation			129,600					129,600
Selling and administrative expenses			26,000					26,000
Total expenses			278,000					234,800
Pretax income			82,000					53,200
Income taxes (32%)			26,240					17,024
Net income		$	55,760				$	36,176

2.

value: 5.00 points

Required information

Required:

1.

Compute each projects annual expected net cash flows.

Answer is not complete

	Project Y	Project Z
Net income	$55,760	$36,176
Depreciation expense
Expected net cash flows

3.

value: 5.00 points

Required information

2.

Determine each projects payback period.

Answer is not complete

Payback Period
	Choose Numerator:	/	Choose Denominator:	=	Payback Period
	Cost of investment	/	Annual net cash flow	=	Payback period
Project Y				=	0
Project Z				=	0

4.

value: 5.00 points

Required information

3.

Compute each projects accounting rate of return.

Answer is not complete

Accounting Rate of Return
	Choose Numerator:	/	Choose Denominator:	=	Accounting Rate of Return
	Annual after-tax net income	/	Annual average investment	=	Accounting rate of return
Project Y					0
Project Z					0

5.

value: 5.00 points

Required information

4.	Determine each projects net present value using 9% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.)

Answer is not complete

Project Y
Chart values are based on:
n =
i =	9%
Select Chart	Amount	x	PV Factor	=	Present Value
Present Value of an Annuity of 1				=	$0
Present value of cash inflows
Present value of cash outflows
Net present value
Project Z
Chart values are based on:
n =	5
i =	9%
Select Chart	Amount	x	PV Factor	=	Present Value
Present Value of an Annuity of 1				=	$0
Present value of cash inflows
Present value of cash outflows
Net present value