Required information Problem 24-2A 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 six-year life and no salvage value. Project Z requires a $350,000 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 $380,000 Direct labor Sales Expenses Direct materials Overhead including depreciation $304,000 53,200 38,000 76,000 45,600 136,800 136,800 Selling and administrative expenses 27,000 27,000 Total expenses 293,000 247,400 Pretax income 87,000 56,600 Income taxes (28) Net income 24,360 $62,640 15,848 $40,752 Problem 24-2A Part 1 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Problem 24-2A Part 2 2. Determine each project's payback period. Project Y Project Z Payback Period Choose Numerator: Choose Denominator: Payback Period = Payback period = 3. Compute each project's accounting rate of return. Choose Numerator: Project Y Accounting Rate of Return Choose Denominator Accounting Rate of Return Accounting rate of return Project Z Problem 24-2A Part 4 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: Select Chart Net present value Project Z Chart values are based on: Select Chart Not present value n= Amount x PV Factor Present Value n i= Amount X PV Factor Present Value