Question

Required: 1. Compute each project's annual expected net cash flows. Net Income Depreciation expense Project Y Project Z $ 51,770 $ 33,666 77,500 103,333 ſ Expected net cash flows $ 131,900 $ 141,073

Please organize it exactly as seen and show your work

Answer 1

Req.1
	Project Y	Project Z
Net Income	$   51,770	$   33,666
Add:
Depreciation	$   77,500	$ 103,333
Annual Expected Net Cash Flow	$ 129,270	$ 136,999

Req.2
Payback Period
	Choose Numerator	/	Choose Denominator	=	Payback Period
	Initial Investments	/	Annual Expected Net Cash Flow	=	Payback Period
Project Y	$310,000	/	$129,270	=	2.40	Years
Project Z	$310,000	/	$136,999	=	2.26	Years
Req.3
Accounting Rate of Return
	Choose Numerator	/	Choose Denominator	=	Accounting Rate of Return
	Net Income	/	Initial Investments	=	Accounting Rate of Return
Project Y	$51,770	/	$310,000	=	16.70%
Project Z	$33,666	/	$310,000	=	10.86%

Req.4
Project Y
Chart values are based on:
n=	4
i=	9%
Select Chart	Amount	*	PV Factor	=	Present Value
Present value of an annuity of 1	$    129,270	*	3.2397	=	$418,796
Initial investment					$310,000
Net Present Value					$108,796
Project Z
Chart values are based on:
n=	3
i=	9%
Select Chart	Amount	*	PV Factor	=	Present Value
Present value of an annuity of 1	$    136,999	*	2.5313	=	$346,786
Initial investment					$310,000
Net Present Value					$36,786