Answer:
(a) Cash payback period:
      Project Red = 5.5 years
      Project blue  = 4.6 years
(b) Net present value for project Red = $19,760 
      Net present value for project Blue =$164,580
(c) Annual rate of return:
Project Red =11.36%
Project Blue  =18.75%
(d) Project Blue
Explanation:
Given Data;  
 Project Blue Capital investment = $640,000
Project Red Capital investment = $440,000 
Project Red  Annual Net income = $ 25,000. 
Project Blue Annual Net income = $ 60,000
Annual depreciation Project Red = (440000/8) 
                                                        = 55,000
Annual depreciation Project Blue = (640000/8)
                                                        =  80,000
Annual cash inflow project A = $ 80,000 
Annual cash inflow project B = $140,000
(a) 
Cash payback period = Initial investment/cash flow per period
Project Red = 440000 /80000
                    = 5.5 years
Project blue = 640000/ 140000 
                     = 4.6 years
(b)
Project Red  Present value of cash inflows = 80000 ×5.747 
                                                                        = $459,760
Project Blue Present value of cash inflows  =140000×5.747
                                                                         = 804580
Net present value for project Red = $459,760 - $440,000 
                                                         = $19,760 
Net present value for project Blue = 804580 - $640,000  
                                                          =$164,580
(c) Annual rate of return:
Project Red   = $25,000 / ($440000)/2
                        =11.36%
Project Blue =  $60000/(640000/2)
                     =18.75%
(d) Savanna should select Project Blue because it has a higher positive NPV and a higher annual rate of return. AND Project Blue has early cash back period also