Morris Company has an opportunity to invest in one of two projects. Project A requires a $480,000 investment for new machinery with a four-year life and no salvage value. Project B also requires a $480,000 investment for new machinery with a three-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.

Required
1. Compute each project's annual expected net cash flows. (Round net cash flows to the nearest dollar.)
2. Determine each project's payback period. (Round the payback period to two decimals.)
3. Compute each project's accounting rate of return. (Round the percentage return to one decimal.)
4. Determine each project's net present value using 8% as the discount rate. For part 4 only, assume that cash flows occur at each year-end. (Round net present values to the nearest dollar.)
Analysis Component
5. Identify the project you would recommend to management and explain yourchoice.

Project A Project B Expenses Direct materlals 70,000 100,000 180,000 36,000 50,000 60,000 180,000 36,000 386,000 326,000 74,000 3,200 22.200 800 51.800 Overhead Including depreclation Selling and administratlve expenses Total expenses 114,000 Income taxes (30%) Net Income 79.