Problem 11-2A Analyzing and computing payback period, accounting rate of return, and net present value LO P1, P2, P3 (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 $310,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $310,000 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 $370,000 $296,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (36%) 51,800 37,000 74,000 44,400 133,200 133,200 26,000 26,000 285,000 240,600 85,000 55,400 30,600 19,944 $ 54,400 $ 35,456 Net income Problem 11-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Problem 11-2A Part 2 2. Determine each project's payback period. Payback Period Choose Numerator: 1 Choose Denominator: Payback Period 1 II Payback period 11 Project Y Project Z II Problem 11-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Numerator: 1 Choose Denominator: Accounting Rate of Return / = Accounting rate of return Project Y Project Z Project Y Chart values are based on: n = i = Select Chart Amount PV Factor = Present Value Net present value Project Z Chart values are based on: n = Select Chart Amount PV Factor = Present Value = Net present value