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Check my work mode:This shows whet is correct or incorrect for the work you have completed so far 0 Required information The following informanon applties to the questions displayed below Most Company has an opportunity to invest in one of two new projects. Project Y requires a $350000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $350,000 investment for new machinery with a three-year life and no salvage value. The two projects yield the following predicted annual resuts. The company uses straight-ine depreciation, and cash flows occur evenly throughout each year (PV at si. EvofS1. PVA of S1. and EVA otS (Use appropriate fector(s) from the tables provided.) $350,000 sae,000 Expenses Direct naterlals Direct labor Overheed including depreclation Selling and administrative expenses 49,88835,800 70,600 42,800 126,000 126,000 Total expenses 88,06052,00 Income taxes (30%) Net Income 56,000 $ 36,40 4. Determine each project's net present value using 8% as the discount rate Assume that cash flows occur at each year-end. (Round your intermediate colculations)

Explanation / Answer

Project Y Chart values are based on: n = 4 i = 8% Select chart Amount X P.V factor = Present Value Present value of an annuity of $1 $       1,43,500 X 3.3121 = $ 4,75,286 Present value of cash inflows = $ 4,75,286 Less: Present value of cash outflows = $ 3,50,000 Net Present Value = $ 1,25,286 Project Z Chart values are based on: n = 3 i = 8% Select chart Amount X P.V factor = Present Value Present value of an annuity of $1 $       1,53,066 X 2.5771 = $ 3,94,466 Present value of cash inflows = $ 3,94,466 Less: Present value of cash outflows = $ 3,50,000 Net Present Value = $ 44,466

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