Part B (Ch. 10-12) 6 Help Save & Exit Submit (The following information applies

Question

Part B (Ch. 10-12) 6 Help Save & Exit Submit (The following information applies to the questions displayed below] Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 machinery with a four-year life and no salvage value. Project Z requires a $320,000 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 at S·Bs1 PVA0H and B o (Use appropriate fector(s) from the tables provided.) investment for new 395,000 $316,00e Direct materials Direct labor Overhead including depreciatSon 55,30039,see 79,0007,400 142,20 142,200 28,00028,600 Total expenses Pretax income Income taxes (36%) 58,900 32-58021,284 57,920 37,696 3. Compute each project's accounting rate of return. Prex 10-11 of 13 Next> 17 AM

Explanation / Answer

Accounting rate of return= Average net profit/ average investment

Average net profit:

Average investment:

Project Y Project Z Average net profit        57,920        37,696

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