Garca Company can invest in one of two alternative projects. Project Y requires a $420,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $432,000 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. (PV of $1, FV of $1, PVA of $1, and FVA of $1)

Note: Use appropriate factor(s) from the tables provided.

Annual Amounts	Project Y	Project Z
Sales of new product	$ 430,000	$ 530,000
Expenses
Materials, labor, and overhead (except depreciation)	196,000	206,000
DepreciationMachinery	105,000	144,000
Selling, general, and administrative expenses	56,000	56,000
Income	$ 73,000	$ 124,000

Problem 26-3A (Algo) Applying payback period, accounting rate of return, and net present value LO P1, P2, P3 Garca Company can invest in one of two alternative projects. Project Y requires a $420,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $432,000 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. (PV of $1, FV of $1, PVA of $1, and FVA of $1 ) Note: Use appropriate factor(s) from the tables provided. 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 accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Complete this question by entering your answers in the tabs below. Compute each project's annual net cash flows. Complete this question by entering your answers in the tabs below. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? vill it choose? Complete this question by entering your answers in the tabs below. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? project will it choose? Complete this question by entering your answers in the tabs below. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Note: Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar. Problem 26-3A (Algo) Applying payback period, accounting rate of return, and net present value LO P1, P2, P3 Garca Company can invest in one of two alternative projects. Project Y requires a $420,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $432,000 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. (PV of $1, FV of $1, PVA of $1, and FVA of $1 ) Note: Use appropriate factor(s) from the tables provided. 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 accounting rate of return, which project will it choose? 4. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Complete this question by entering your answers in the tabs below. Compute each project's annual net cash flows. Complete this question by entering your answers in the tabs below. Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? vill it choose? Complete this question by entering your answers in the tabs below. Compute each project's accounting rate of return. If the company bases investment decisions solely on accounting rate of return, which project will it choose? project will it choose? Complete this question by entering your answers in the tabs below. Compute each project's net present value using 7% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Note: Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar