Problem $26-3$A $($Algo$)$ Applying payback period, accounting rate of return, and net present value LO P$1,$

P$2,$ P$3$

Garcia Company can invest in one of two alternative projects. Project $Y$ requires a $$500,000$ initial Investment for new machinery with

a four$-$year life and no salvage value. Project $Z$ requires a $$480,000$ initial investment for new machinery with a three$-$year life and no

salvage value. The two projects yleld 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 approprlate factor$($s$)$ from the tables provided.

Required:

Compute each project's annual net cash flows.

Compute each project's payback perlod. If the company bases investment decisions solely on payback period, which project will

It choose?

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?

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.

Required $3$

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?