Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0 Garcia Company can invest in one of two alternative projects. Project Y requires a $430,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $474,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery Selling, general, and administrative expenses Income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Project Y $ 480,000 Required 4 Required: 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. 225,000 107,500 63,000 $ 84,500 Project 2 $ 442,000 202,000 158,000 51,000 $ 31,000 Required 1 Required 2 Required 3 Required 4 Compute each project's annual net cash flows. Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Net cash flow $ $ Income Project Y 480,000 $ 225,000 107,500 63,000 84,500 $ Cash Flow 480,000 $ 480,000 $ Project Z Cash Flow 442,000 $ 442,000 Income 202,000 158,000 51,000 31,000 $ 442,000 Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decisions solely on payback period, which project will it choose? Payback period 0 0 Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? Numerator: Accounting Rate of Return 1 Denominator: = Accounting rate of return Project Y Project Z If the company bases investment decisions solely on accounting rate of return, which project will it choose? 0 0 es Required 1 Required 2 Required 4 Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Years 1-4 Project Y Net present value Years 1-3 Project Z Required 3 Present Value Net Cash Flows x of Annuity at 7% Present Value Net Cash Flows x of Annuity at 7% Net present value If the company bases investment decisions solely on net present value, which project will it choose? Present Value of Net Cash Flows $ Present Value of Net Cash Flows $ 0
Expert Answer:
Answer rating: 100% (QA)
To compute each projects annual net cash flows we need to subtract the annual expenses from the annual sales to get the net income and then add back the annual depreciation since its a noncash expense ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Lopez Co. can invest in one of two alternative projects. Project Y requires a $240,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $240,000...
-
Garca Co. can invest in one of two alternative projects. Project Y requires a $360,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $360,000...
-
Refer to the bolt strength problem 17.47. Assume = 6,050 and 5 100. Use the following 24 individual bolt strength observations to answer the questions posed. (a) Prepare a histogram and/or normal...
-
Give two examples of nonfinancial measures of customer satisfaction relating to quality.
-
Let the risk-free rate be \(3 \%\) and the market return and risk be \(\left(\mu_{M}=ight.\) \(\left.8 \%, \sigma_{M}=10 \%ight)\). Given an asset with \(\beta=0.8\) and a return standard deviation...
-
Plaintiffs purchased stock warrants (rights to purchase) for blocks of Osborne Computer Corp., the manufacturer of the first mass-market portable personal computer. Because of inability to produce a...
-
The city of New Berlin is considering making several of its streets one-way. What is the maximum number of cars per hour that can travel from east to west? The network is shown inFigure. 2 5 0 0 2 2...
-
Even method: 1- Algorithm Compare between recursion and iteration 2- Memory representation (Ex: EVEV (0,10)) recursion iteration
-
The statement of cash flows for the manufacturing firm Deluxe Rain Shower Heads is shown below. Using both the Direct Method Statement of Cash flows for the Years Ending: Cash flows from Operating...
-
The Steering Arm Value Stream produces TWI's steering arms. A steering arm is a metal rod with a forged fitting welded to each end. The steering arms are available in 20 different lengths, 2...
-
Discuss the possible contribution of internal and external stakeholders in organizational strategic planning. Specifically, what are stakeholders' roles in the planning process of vision, mission,...
-
Can you give a research studies, facts, and journals of the impacts of overpasses to wildlife in banff national park? include both negative and positive impacts
-
Discuss the different environmental factors that limit the jobs of criminal justice organizations. Explain how these environmental factors can influence the future of the criminal justice system.
-
Discuss the potential problems in the interface between the Department of Homeland Security and a criminal justice organization.
-
How do synchronization techniques differ between shared-memory and message-passing concurrency models?
-
Suppose that Stillwater Designs has two classes of distributors: JIT distributors and nonJIT distributors. The JIT distributor places small, frequent orders, and the nonJIT distributor tends to place...
-
Discrete sample spaces: suppose there are N cable cars in San Francisco, numbered sequentially from 1 to N. You see a cable car at random; it is numbered 203. You wish to estimate N. (See Goodman,...
-
Zira Co. reports the following production budget for the next four months. Each finished unit requires five pounds of direct materials, and the company wants to end each month with direct materials...
-
Refer to information in Exercises 19-6 and 19-7. Set up T-accounts for each of the following accounts, each of which started the month with a zero balance: Raw Materials Inventory, Work in Process...
-
Fivio Co. reports the following information. (1) Compute return on total assets for the current year and for 1 year ago. (2) Is Fivio more efficient or less efficient in using total assets to produce...
-
Fill in the blanks to make the following statements correct. a. Economists have designed____________ to better explain and predict the behaviour we observe in the world around us. b. A variable, such...
-
The following supply and demand schedules describe a hypothetical Canadian market for potash. a. What is the equilibrium price of potash? b. How much potash would actually be purchased if the price...
-
According to Statistics Canada, Canada's exports and imports of energy (combined totals of fossil fuels, hydro, and nuclear, all measured in petajoules) over a five-year period were as follows: a....
Study smarter with the SolutionInn App