Carla Vista 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 EdgeProject Clayton Capital investment $165,000 $183,000 $212,000 Annual net income: Year 1 15,400 19,800 29,700 2 15,400 18,700 25,300 3 15,400 17,600 23,100 4 15,400 13,200 14,300 5 15,400 9,900 13,200 Total $77,000 $79,200 $105,600 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.)Click here to view the factor table.(a) Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)Project Bono enter a number of years rounded to 2 decimal placesyearsProject Edge enter a number of years rounded to 2 decimal placesyearsProject Clayton enter a number of years rounded to 2 decimal placesyears View PoliciesCurrent Attempt in ProgressCarla Vista Company is considering three long-term capital investment proposals. Eachinvestment has a useful life of 5 years. Relevant data on each project are as follows.Capital investmentAnnual net income:Year 1Total235слProject Bono$165,00015,40015,40015,40015,40015,400$77,000Project Edge$183,00019,80018,70017,60013,2009,900$79,200Project Clayton$212,00029,70025,30023,10014,30013,200$105,600Depreciation is computed by the straight-line method with no salvage value. The company'scost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) (a)Compute the cash payback period for each project. (Round answers to 2 decimal places,e.g. 10.50.)Project BonoProject EdgeProject Claytonyearsyearsyears

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Answered: Carla Vista Company is considering…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(a)

Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)

Project Bono	enter a number of years rounded to 2 decimal places	years
Project Edge	enter a number of years rounded to 2 decimal places	years
Project Clayton	enter a number of years rounded to 2 decimal places	years

View Policies
Current Attempt in Progress
Carla Vista 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.
Capital investment
Annual net income:
Year 1
Total
2
3
5
сл
Project Bono
$165,000
15,400
15,400
15,400
15,400
15,400
$77,000
Project Edge
$183,000
19,800
18,700
17,600
13,200
9,900
$79,200
Project Clayton
$212,000
29,700
25,300
23,100
14,300
13,200
$105,600
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. (Round answers to 2 decimal places,
e.g. 10.50.)
Project Bono
Project Edge
Project Clayton
years
years
years

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b)
Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, use
either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in
the factor table provided.)
Net present value
tA
$
Project Bono
$
Project Edge
+A
$
Project Clayton

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Compute the net present value for each project. (Round answers to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

		Project Bono		Project Edge		Project Clayton
Net present value		$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places		$enter a dollar amount rounded to 0 decimal places

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