the net present value to the nearest dollar.) Most Company has an opportunity to invest in one of two new projects. Project Y requires a $350,000 Problem 25-2A investment for new machinery with a four-year life and no salvage value. Project Z requires a $350,000 Analysis and computation of investment for new machinery with a three-year life and no salvage value. The two projects yield the fol- payback period, accounting rate lowing predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly of return, and net present value P1 P2 P3 Project Y Project Z Sales Expenses $350,000$280.000 Direct materials Direct labor Overhead including depreciation Selling and administrative expenses .. 49,00035,000 70,000 42000 126,00026,000 25,000 270000 228,000 25,000 Total expenses Pretax income. Income taxes (30%) , , , , Net income. 80,00052,000 15,600 s 56,000 36,400 24,000 Required 1. Compute each project's annual expected net cash flows. (Round the net cash flows to the nearest dollar.) 2. Determine each project's payback period. (Round the payback period to two decimals.) 3. Compute each project's accounting rate of return. (Round the percentage return to one decimal.) 4, Determine each project's net present value using 8% as the discount rate. For part 4 only, assume that Check For Project Y: (2) 2.44 years 63) 32% (4) $125.286 cash flows occur at each year-end. (Round the net present value to the nearest dollar.) Analysis Component 5. Identify the project you would recommend to management and explain your choice