Question

Most Company has an opportunity to invest in one of two new
projects. Project Y requires a $340,000 investment for new
machinery with a six-year life and no salvage value. Project Z
requires a $340,000 investment for new machinery with a five-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 | $ | 350,000 | $ | 280,000 | ||||

Expenses | ||||||||

Direct materials | 49,000 | 35,000 | ||||||

Direct labor | 70,000 | 42,000 | ||||||

Overhead including depreciation | 126,000 | 126,000 | ||||||

Selling and administrative expenses | 25,000 | 25,000 | ||||||

Total expenses | 270,000 | 228,000 | ||||||

Pretax income | 80,000 | 52,000 | ||||||

Income taxes (30%) | 24,000 | 15,600 | ||||||

Net income | $ | 56,000 | $ | 36,400 | ||||

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.)**

Answer #1

Project
Y |
|||||

Chart values are based on: | |||||

n = | 6 | ||||

i = | 7% | ||||

Select Chart | Amount | x | PV Factor | = | Present Value |

Present value of an annuity of 1 | 112667 | x | 4.7665 | = | 537027 |

Present value of cash inflows | 537027 | ||||

Present value of cash outflows | 340000 | ||||

Net present value | 197027 | ||||

Project
Z |
|||||

Chart values are based on: | |||||

n = | 5 | ||||

i = | 7% | ||||

Select Chart | Amount | x | PV Factor | = | Present Value |

Present value of an annuity of 1 | 104400 | x | 4.1002 | = | 428061 |

Present value of cash inflows | 428061 | ||||

Present value of cash outflows | 340000 | ||||

Net present value | 88061 | ||||

Workings: |
|||||

Project Y | Project Z | ||||

Net income | 56000 | 36400 | |||

Add: Depreciation | 56667 | 68000 | |||

Annual cash flows | 112667 | 104400 |

Most Company has an opportunity to invest in one of two new
projects. Project Y requires a $340,000 investment for new
machinery with a six-year life and no salvage value. Project Z
requires a $340,000 investment for new machinery with a five-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...

Most Company has an opportunity to invest in one of two new
projects. Project Y requires a $340,000 investment for new
machinery with a six-year life and no salvage value. Project Z
requires a $340,000 investment for new machinery with a five-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...

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...

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...

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,...

Required information
[The following
information applies to the questions displayed below.]
Most Company has an opportunity to invest in one of two new
projects. Project Y requires a $340,000 investment for new
machinery with a six-year life and no salvage value. Project Z
requires a $340,000 investment for new machinery with a five-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...

Required information
[The following
information applies to the questions displayed below.]
Most Company has an opportunity to invest in one of two new
projects. Project Y requires a $340,000 investment for new
machinery with a six-year life and no salvage value. Project Z
requires a $340,000 investment for new machinery with a five-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...

A project requires an investment of $180000, has no salvage
value, and a life of 7 years. Use MACRS depreciation and a tax rate
of 18%. What are the internal rate of return and discounted payback
period? The yearly cash flows are:
Income($) 150,250,350,450,500,650,500
Cash expenses($) 50,75,100,150,200,250,200
Is this project recommended?

A company has the option to invest in project A, project B, or
neither (the projects are mutually exclusive and the company has no
other investment options). Project A requires an initial investment
of $100,000 today and provides cash flows of $35,000 a year for
five years. The project will also return back $20,000 in capital in
year six. Project B requires a $135,000 investment today and will
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Factor Company is planning to add a new product to its line. To
manufacture this product, the company needs to buy a new machine at
a $511,000 cost with an expected four-year life and a $19,000
salvage value. All sales are for cash, and all costs are
out-of-pocket, except for depreciation on the new machine.
Additional information includes the following. (PV of $1, FV of $1,
PVA of $1, and FVA of $1) (Use appropriate factor(s) from
the tables provided.)...

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