PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2,11-3, 11-6] Hearne Company has a number of potential capitalinvestments. Because these projects vary in nature, initialinvestment, and time horizon, management is finding it difficult tocompare them. Assume straight line depreciation method is used.Project 1: Retooling Manufacturing Facility This project wouldrequire an initial investment of $5,600,000. It would generate$1,000,000 in additional net cash flow each year. The new machineryhas a useful life of eight years and a salvage value of $1,180,000.Project 2: Purchase Patent for New Product The patent would cost$3,925,000, which would be fully amortized over five years.Production of this product would generate $785,000 additionalannual net income for Hearne. Project 3: Purchase a New Fleet ofDelivery Trucks Hearne could purchase 25 new delivery trucks at acost of $190,000 each. The fleet would have a useful life of 10years, and each truck would have a salvage value of $6,500.Purchasing the fleet would allow Hearne to expand its customerterritory resulting in $950,000 of additional net income per year.Required: 1. Determine each project's accounting rate of return.(Round your answers to 2 decimal places.) 2. Determine eachproject's payback period. (Round your answers to 2 decimal places.)3. Using a discount rate of 10 percent, calculate the net presentvalue of each project. (Future Value of $1, Present Value of $1,Future Value Annuity of $1, Present Value Annuity of $1.) (Useappropriate factor(s) from the tables provided. Round yourintermediate calculations to 4 decimal places and final answers to2 decimal places.) 4. Determine the profitability index of eachproject and prioritize the projects for Hearne. (Round yourintermediate calculations to 2 decimal places. Round your finalanswers to 4 decimal places.)