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Business, 08.09.2021 21:40 alexandroperez13

Most Company has an opportunity to invest in one of two new projects. Project Y requires a $340,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $340,000 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. Project Y Project Z
Sales $360,000 $288,000
Expenses 50,400 36,000
Direct material 72,000 43,200
Direct labor 129,600 1296
Overhead Including depreciation 26,000 26,000
Selling and administrative expenses 278,000 234,800
Total expenses
Pretax Income 82,000 53,200
Income taxes (32%) 26,240 17,024
Net Income $55,760 $36,176

Required:
a. Compute each project's annual expected net cash flows.
b. Determine each project's payback period.

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