U3 company is considering three long-term capital investment proposals. each investment has a useful life of 5 years. relevant data on each project are as follows. project bono project edge project clayton capital investment $168,000 $183,750 $202,000 annual net income: year 1 14,700 18,900 28,350 2 14,700 17,850 24,150 3 14,700 16,800 22,050 4 14,700 12,600 13,650 5 14,700 9,450 12,600 total $73,500 $75,600 $100,800 depreciation is computed by the straight-line method with no salvage value. the company’s cost of capital is 15%. (assume that cash flows occur evenly throughout the year.)

1- compute the cash payback period for each project: bono, edge, clayto
2- compute the net present value for each project.
3- compute the annual rate of return for each project.
4- rank the projects on each of the foregoing bases. which project do you recommend?

6. why the aggregate supply curve slopes upward in the short run in the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. several theories explain how this might happen. for example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. consider a soybean farmer who expects a price level of 100 in the coming year. if the actual price level turns out to be 90, soybean prices will , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by the quantity of soybeans supplied. if other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to the natural level of output in the short run.