Business, 25.08.2021 02:30 jackie1013fusse

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 $210,000
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.)
a. Compute the cash payback period for each project.
b. Compute the net present value for each project.
c. Compute the annual rate of return for each project.

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U3 Company is considering three long-term capital investment proposals. Each investment has a useful...

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