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Check my work 5 Required information Part 1 of 4 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 $305,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $305,000 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.) 1.66 points eBook Project Y Project z $385,000 $308,000 Sales Expenses Print Direct materials Direct labor Overhead including depreciation Selling and administrative expenses 38,500 46,200 138,600 138,600 27,000 297,500 250,300 57,700 24,500 16 156 $ 63,000 41,544 References 53,900 77,000 28,000 87,500 Total expenses Pretax income Income taxes (28%) Net income

Explanation / Answer

1) Annual expected cash inflow :

Project Y Project Z Net income 63000 41544 Depreciation 305000/4 = 76250 305000/3 = 101667 Annual cash flow 139250 143211

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