Most Company has an opportunity to invest in one of two new projects. Project Y requires a $350,000 investment for new machinery with a four-year life and no salvage value.
Project Z requires a $350,000 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 $350,000 $280,000
Expenses:
Direct materials 49,000 35,000
Direct labor 70,000 42,000
Overhead including depreciation 126,000 126,000
Selling and administrative expenses 25,000 25,000
Total expenses $270,000 $228,000
Pretax income 80,000 52,000
Income taxes (30%) 24,000 15,600
Net income $56,000 $36,400
Required:
1. Compute each project's annual expected net cash flows.
2. Determine each project's payback period.
3. Compute each project's accounting rate of return.
4. Determine each project's net present value, using 8% as the discount rate.
Assume that cash flows occur at each year-end.

Ben collins plans to buy a house for $166,000. if the real estate in his area is expected to increase in value by 2 percent each year, what will its approximate value be five years from now?

The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.

"in my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said wim niewindt, managing director of antilles refining, n.v., of aruba. "at a price of $21 per drum, we would be paying $4.70 less than it costs us to manufacture the drums in our own plant. since we use 70,000 drums a year, that would be an annual cost savings of $329,000." antilles refining's current cost to manufacture one drum is given below (based on 70,000 drums per year):