Hallet 43. Savanna Company is considering two capital investment proposals. Relevant data on each project are as follows: Project Red Project Blue Capital investment $440,000 $640,000 Annual net income 25,000 60,000 Estimated useful life 8 years 8 years Depreciation is computed by the straight-line method with no salvage value. Savanna requires an 8% rate of return on all new investments. The present value of 1 for 8 periods at 8% is .540 and the present value of an annuity of 1 for 8 periods is 5.747. ecce Instructions Compute the cash payback period for each project. Compute the net present value for each project. Compute the annual rate of return for each project. Which project should Savanna select? File Home Insert Draw Page Layout Formulas Data Review View F27 X auw 12 1 43. Savanna Company is considering two capital investment proposals. Relevant 2 data on each project are as follows: Project Red Project Blue Capital investment $440,000 $640,000 Annual net income $25,000 $60,000 Estimated useful life Depreciation is computed by the straight-line method with no salvage value. 8 Savanna requires an 8% rate of return on all new investments. The present value of 1 for 8 periods at 8% is.540 and the present value of an annuity of 1 for 8 10 periods is 5.747 11 (a) Compute the cash payback period for each project Project Red Project Blue 13 Annual net income 14 Annual depreciation 15 Annual Cash flow 16 Investment 17 Cash payback 18 (6) Compute the net present value for each project. 19 Present Value of Cash flows 20 Investment 21 NPV 222 ) Compute the annual rate of return for each project 23 Net Income 24 Average Investment 25 Annual Rate of Return 26 (d) Which project should Savanna select? 27 Savanna should select Project Blue because it has a larger positive 28 net present value and a higher annual rate of return. In addition, 29 Project Blue has a slightly shorter cash payback period