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yield the following predict traight-line depreciation, and cash flows occur evenly throughout each year. (PV (Use appropriate factor(s) from the tables provided.) Project Y Project 2 $385,000 $308,000 Sales Expenses Direct materials Direct labor 53,900 000 ,רר 138,600 38,500 46,200 138,600 Overhead including depreciation Selling and administrative expenses Total expenses 28,000 297,500 87,500 22,750 $ 64,750 27,000 250,300 57,700 15,002 Pretax income Income taxes (26%) Net income $ 42,698 red: npute each project's annual expected net cash flows. Project Y Project Z

yield the following predict traight-line depreciation, and cash flows occur evenly throughout each year. (PV (Use appropriate factor(s) from the tables provided.) Project Y Project 2 $385,000 $308,000 Sales Expenses Direct materials Direct labor 53,900 000 ,רר 138,600 38,500 46,200 138,600 Overhead including depreciation Selling and administrative expenses Total expenses 28,000 297,500 87,500 22,750 $ 64,750 27,000 250,300 57,700 15,002 Pretax income Income taxes (26%) Net income $ 42,698 red: npute each project's annual expected net cash flows. Project Y Project Z

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 $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.) Project Y Project Z $385,000 $308,000 Sales Expenses Direct materials 53,900 77,000 138,600 38,500 46,200 138,600 Direct labor Overhead including depreciation Selling and administrative expenses Total expenses 28,000 297,500 87,500 22,750 27,000 250,300 Pretax income 57,700 Income taxes (26%) 15,002 Net income $ 64,750 $ 42,698 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z
Transcribed Image Text: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.) Project Y Project Z $385,000 $308,000 Sales Expenses Direct materials 53,900 77,000 138,600 38,500 46,200 138,600 Direct labor Overhead including depreciation Selling and administrative expenses Total expenses 28,000 297,500 87,500 22,750 27,000 250,300 Pretax income 57,700 Income taxes (26%) 15,002 Net income $ 64,750 $ 42,698 Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z
Direct materials Direct labor 53,900 77,000 138,600 38,500 46,200 138,600 27,000 250,300 57,700 15,002 $ 42,698 Overhead including depreciation Selling and administrative expenses Total expenses 28,000 297,500 87,500 22,750 $ 64,750 Pretax income Income taxes (26%) Net income Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Net income 53,790 $ 152,500 Depreciation expense 35,046 142,500 Expected net cash flows 53,790 $ 35,046 %24 %24
Transcribed Image Text:Direct materials Direct labor 53,900 77,000 138,600 38,500 46,200 138,600 27,000 250,300 57,700 15,002 $ 42,698 Overhead including depreciation Selling and administrative expenses Total expenses 28,000 297,500 87,500 22,750 $ 64,750 Pretax income Income taxes (26%) Net income Required: 1. Compute each project's annual expected net cash flows. Project Y Project Z Net income 53,790 $ 152,500 Depreciation expense 35,046 142,500 Expected net cash flows 53,790 $ 35,046 %24 %24
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