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Most Company has an opportunity to invest in one of two new projects. Project Y requires a $325,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $325,000 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 Sales   $ 370,000     $ 296,000   Expenses                 Direct materials     51,800       37,000   Direct labor     74,000       44,400   Overhead including depreciation     133,200       133,200   Selling and administrative expenses     26,000       26,000   Total expenses     285,000       240,600   Pretax income     85,000       55,400   Income taxes (38%)     32,300       21,052   Net income   $ 52,700     $ 34,348

Most Company has an opportunity to invest in one of two new projects. Project Y requires a $325,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $325,000 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 Sales   $ 370,000     $ 296,000   Expenses                 Direct materials     51,800       37,000   Direct labor     74,000       44,400   Overhead including depreciation     133,200       133,200   Selling and administrative expenses     26,000       26,000   Total expenses     285,000       240,600   Pretax income     85,000       55,400   Income taxes (38%)     32,300       21,052   Net income   $ 52,700     $ 34,348

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Most Company has an opportunity to invest in one of two new projects. Project Y requires a $325,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $325,000 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
Sales   $ 370,000     $ 296,000  
Expenses                
Direct materials     51,800       37,000  
Direct labor     74,000       44,400  
Overhead including depreciation     133,200       133,200  
Selling and administrative expenses     26,000       26,000  
Total expenses     285,000       240,600  
Pretax income     85,000       55,400  
Income taxes (38%)     32,300       21,052  
Net income   $ 52,700     $ 34,348  
 
oblem 26-2A Part 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 Project Y 0. Project Z < Prev 14 of 9 Next > 07 12943.jpg 144844485 11655...jpg 144819707 12943. jpg 144844485 11655.jpg Type here to search F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F1 23 %$4 & 3 4. 6 7 E T A G JK C8 FL S
Transcribed Image Text:oblem 26-2A Part 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 Project Y 0. Project Z < Prev 14 of 9 Next > 07 12943.jpg 144844485 11655...jpg 144819707 12943. jpg 144844485 11655.jpg Type here to search F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F1 23 %$4 & 3 4. 6 7 E T A G JK C8 FL S
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