please do required 1-4
Garcia Company can invest in one of two alternative projects. Project Y requires a $425,000 initial investment for new machinery with a four-year life and no salvage value Project Z requires a $462,000 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.) Annual Amounts Project Project 2 Sales of new product $ 475,000 $ 440,000 Expenses Materials, labor, and overhead (except depreciation) 220,000 200,000 Depreciation Machinery 106,250 154,000 Selling, general, and administrative expenses 61,000 50,000 Incone $ 87,750 $ 36,000 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 6% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? Compute each project's annual net cash flows. Expected Net Cash Flow - Project Y Net cash flow Expected Net Cash Flow - Project Z Net cash flow Required Required 2 > Required 1 Required 2 Required 3 Required 4 Compute each project's payback period. If the company bases investment decisions solely on payback period, which project will it choose? Payback Period Denominator: Numerator: Project Y Project Z If the company bases investment decision tooly on payback period, which project will it choose? Payback period 0 0 Required 1 Required 2 Required 3 Required 4 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? Accounting Rate of Retum Denominator Numerator: Accounting rate of retum 0 0 Project Y Project 2 If the company bases Investment decisions solely on accounting rate of return, which project will it choose? Compute each project's net present value using 6% as the discount rate. If the company bases investment decisions solely on net present value, which project will it choose? (Do not round Intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar) Project Y Chart values are based on: Select Chart Amount X PV Factor Present Value $ 0 Net present value Project 2 Chart values are based on: = Select Chart Amount Py Factor Present Value $ 0 Net present value If the company bases investment decisions solely project will it choose? net present value, which
