Garcia Company can invest in one of two alternative projects. Project Y requires a $440,000 initial investment for new machinery with a four-year life and no salvage value. Project Z requires a $498,000 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) (Use appropriate factor(s) from the tables provided.) Project Y $ 490,000 Project z $ 466,000 Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income 235,000 110,000 67,000 $ 78,000 206,000 166,000 53,000 $ 41,000 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 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? Project Y Chart values are based on: n = i = 8% Select Chart Amount PV Factor Present Value Present Value of an Annuity of 1 = $ 0 Present value of cash inflows Initial investment Net present value Project z Chart values are based on: n = 3 i = 8% Select Chart Amount PV Factor = Present Value Present Value of an Annuity of 1 = $ 0 Present value of cash inflows Initial investment Net present value If the company bases investment decisions solely on net present value, which project will it choose