Question

PLEASE fill out chart pasted!!!!!

Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $320,000 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. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

	Project Y				Project Z
Sales		$	390,000			$	312,000
Expenses
Direct materials			54,600				39,000
Direct labor			78,000				46,800
Overhead including depreciation			140,400				140,400
Selling and administrative expenses			28,000				28,000
Total expenses			301,000				254,200
Pretax income			89,000				57,800
Income taxes (36%)			32,040				20,808
Net income		$	56,960			$	36,992

4. Determine each project’s net present value using 7% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.)

Project Y
Chart values are based on:
n =
i =
Select Chart	Amount	x	PV Factor	=	Present Value
				=	$0
Net present value
Project Z
Chart values are based on:
n =
i =
Select Chart	Amount	x	PV Factor	=	Present Value
				=	$0
Net present value

Answer 1

Project Y
Chart values are based on:
n =	5
i =	7%
Select Chart	Amount	x	PV Factor	=	Present Value
Present value of an annuity of 1	120960	x	4.1002	=	495960
Present value of cash inflows					495960
Present value of cash outflows					320000
Net present value					175960
Project Z
Chart values are based on:
n =	4
i =	7%
Select Chart	Amount	x	PV Factor	=	Present Value
Present value of an annuity of 1	116992	x	3.3872	=	396275
Present value of cash inflows					396275
Present value of cash outflows					320000
Net present value					76275
Workings:
	Project Y	Project Z
Net income	56960	36992
Add: Depreciation	64000	80000
Annual cash flows	120960	116992