Week 4 Homework Asus Check my work mode : This shows what is correct or incorrec

Question

Week 4 Homework Asus Check my work mode : This shows what is correct or incorrect for the work you have comple Required informetion The following information applies to the questions displayed below Project Y requires a $350,000 investment for new Most Company has an opportunity to invest in one of two new projects machinery with a four-year life and no salvage value. Pr three-year life and no salvage value. The two straight-line depreciation, and cash flows occur evenly throughout each year (PW of S1.EV of S1 PVA.of Si and EVA of St (Use appropriate factoris) from the tables provided.) oject Z requires a $350,000 investment for new machinery witha uses $550,000 $200,000 Expenses 49,68835,00 0,0 42,00e 126,608 126,090 oirect materials Overhead including depreciation Selling and administrative expenses Tatal expenses pretax income bene taxes (es) Net income 56,000 36,400 Required: 1. Compute each project's annual expected net cash flows 3 Answer is complete but not entirely correct. s 61.250 40,390 expense 87500118,667 net cash flows $ 148,750 5 157 067 0 C Prey

Explanation / Answer

Computation of each projects expected net cash flow: Project Y Project Z Net Income (given) $           56,000 $           36,400 Add: Depreciation expense $           87,500 $       1,16,667 Expected Net cash flows $       1,43,500 $       1,53,067 Calculation of Depreciation Expense Depreciation expense = (Cost of equipmet - Salvage value) / useful life Project Y Project Z Cost of Machinery $       3,50,000 $       3,50,000 Salvage Value 0 0 (a) $       3,50,000 $       3,50,000 (b) Useful life 4 years 3 years (a) / (b) Depreciation expense $           87,500 $       1,16,667

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