26-3A Applying payback period, accounting rate of return, and net present value P1 P2 P3 Garc a Co. can invest in one of two alternative projects. Project Y requires a $360,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $360,000 initial investment for new machinery with a three-year life and no salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. Annual Amounts Project Y Project Z Sales of new product. $400,000 $500,000 Expenses Materials, labor, and overhead (except depreciation).. 190,000 200,000 Depreciation-Machinery 90,000 120,000 Selling, general, and administrative expenses.... Income. 50,000 50,000 $ 70,000 $130,000 Required 1. Compute each project's annual net cash flows. 2. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? 3. Compute each project's accounting rate of return. If the company bases investment decisions solely on page 987 accounting rate of return, which project will it choose? 4. Compute each project's net present value using 8% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose