Required information 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 $320,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $320,000 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. (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 $385,000 $308,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (38%) Net income 53,900 77,000 138,600 28,000 297,500 87,500 33,250 $ 54,250 38,500 46,200 138,600 27,000 250, 300 57,700 21,926 $ 35,774 Required: 1. Compute each project's annual expected net cash flows. Project Y Project z 2. Determine each project's payback period. Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period 1 0 Project Y Project Z 0 3. Compute each project's accounting rate of return. Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return Accounting rate of return 0 Project Y Project Z 0 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 PV Factor = Present Value = Net present value Project z Chart values are based on: n = i = 1 Select Chart Amount x PV Factor Present Value n = Select Chart Amount PV Factor Present Value Net present value