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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. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

FV = http://lectures.mhhe.com/connect/0077429923/Images/tableb.2.JPG

PV = http://lectures.mhhe.com/connect/0077429923/Images/tableb.1.JPG

FVA = http://lectures.mhhe.com/connect/0077429923/Images/tableb.4.JPG

PVA = http://lectures.mhhe.com/connect/0077429923/Images/tableb.3.JPG

	Project Y					Project Z
Sales		$	390,000				$	305,000
Expenses
Direct materials			54,600					38,125
Direct labor			78,000					45,750
Overhead including depreciation			140,400					137,250
Selling and administrative expenses			28,000					27,000
Total expenses			301,000					248,125
Pretax income			89,000					56,875
Income taxes (30%)			26,700					17,063
Net income		$	62,300				$	39,812

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