Question

PLEASE fill out chart pasted!!!!! Most Company has an opportunity to invest in one of two...

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

 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