Homework answers / question archive / 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

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

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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 $315,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $315,000 investment for new machinery with a four-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 $ 385,000 Project Z $ 308,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses 53,900 77,000 138,600 28,000 38,500 46,200 138,600 27,000 Total expenses 297,500 250,300 Pretax income Income taxes (26%) 87,500 22,750 57,700 15,002 Net income $ 64,750 $ 42,698
Problem 24-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z
Problem 24-2A Part 2 2. Determine each project's payback period. Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period 1 = = 0 Project Y Project Z 0
Problem 24-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Numerator: 1 Choose Denominator: Accounting Rate of Return Accounting rate of return 1 = 0 Project Y Project Z 0