Garcia Company can invest in one of two alternative projects. Project requires a $ initial investment for new machinery with
a fouryear life and no salvage value. Project Z requires a $ initial investment for new machinery with a threeyear life and no
salvage value. The two projects yield the following annual results. Cash flows occur evenly within each year. PV of $ FV of $ PVA of
$ and FVA of $Use appropriate factors from the tables provided.
Required:
Compute each project's annual net cash flows.
Compute each project's payback period. 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 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.
