Check my work Required information Part 4 of 4 The following information applies

Question

Check my work Required information Part 4 of 4 The following information applies to the questions displayed below.j Most Company has an opportunity to invest in one of two new projects. Project Y requires a $305,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $305,000 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 FVA of $1) (Use appropriate factor(s) from the tables provided.) 1.66 points Skipped Project Y Project z $385,000 $308,000 Sales Expenses eBook Print References Direct materials Direct labor Overhead including depreciation Selling and administrative expenses 38,500 46,200 138,600 138,600 27,000 297,500 250,300 57,700 24,500 16,156 53,900 77,000 28,000 87,500 Total expenses Pretax income Income taxes (288) Net income 63,000 41,544 4. Determine each project's net present value using 7% as the discount rate. Assume that cash flows occur at each year-end. (Round vour intermediate calculations.

Explanation / Answer

Computation of Annual Cashflows Project Y Project Z Net income 63000 41544 Add: Annual Depreciation 76250 101667 Annual Cash inflows 139250 143211 Project Y n =4 i= 7% Select Chart Amount * PV Factor Present value Annuity Present Value 139250 3.3872 471667.6 Present Value of Inflows 471668 Less: Initial Investment 305000 Net Present Value 166668 Project Z n=3 i= 7% Select Chart Amount * PV Factor Present value Annuity Present Value 143211 2.6243 375828.6 Present Value of Inflows 375829 Less: Initial Investment 305000 Net Present Value 70829

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.