Most Company has an opportunity to invest in one of two new projects. Project Y requires a $310,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $310,000 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
Sales $ 395,000 $ 316,000
Expenses
Direct materials 55,300 39,500
Direct labor 79,000 47,400
Overhead including depreciation 142,200 142,200
Selling and administrative expenses 28,000 28,000
Total expenses 304,500 257,100
Pretax income 90,500 58,900
Income taxes (34%) 30,770 20,026
Net income $ 59,730 $ 38,874