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 $350,000 investment for new machinery with a five-year life and no salvage value. Project Z requires a $350,000 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 EVA of $1 (Use appropriate factor(s) from the tables provided.) Project Y Project z Sales $385,000 5308,000 Expenses Direct materials 53,900 38,500 Direct labor 77,000 46,200 Overhead including depreciation 138,600 138,600 Selling and administrative expenses 28,000 27 000 Total expenses 297,500 250, 300 Pretax income 87,500 57,700 Income taxes (36X) 31,500 20,772 Net income $ 56,000 $ 36,928 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 Denominator: Choose Numerator: Payback Period Payback period 11 11 0 Project Y Project Z 11 0 Problem 11-2A Part 3 3. Compute each project's accounting rate of return. Accounting Rate of Retum 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 8% as the discount rate. Assume that cash flows occur a your Intermediate calculations.) Prototy Chart values are based on: n Select Chart Amount PV Factor Present Value Net present value Project 2 Chart values are based on: n = Amount x Select Chart PV Factor = Present Value Net present value