Crane 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 2 3 4 5 Total Project Bono $168,000 14,700 14,700 14,700 14,700 14,700 $73,500 Project Edge Project Clayton $183,750 $210,000 18,900 17,850 16,800 12,600 9,450 $75,600 28,350 24,150 22,050 13,650 12,600 $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.)
Crane 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 2 3 4 5 Total Project Bono $168,000 14,700 14,700 14,700 14,700 14,700 $73,500 Project Edge Project Clayton $183,750 $210,000 18,900 17,850 16,800 12,600 9,450 $75,600 28,350 24,150 22,050 13,650 12,600 $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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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H3).
Transcribed Image Text:Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50)
Project Bono
A
Project Edge
Project Clayton
years
years
years.
Transcribed Image Text:Crane 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
2
3
4
5
Total
Project Bono
$168,000
14,700
14,700
14,700
14,700
14,700
$73,500
Project Edge Project Clayton
$183,750
$210,000
18,900
17,850
16,800
12,600
9,450
$75,600
28,350
24,150
22,050
13,650
12,600
$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.)
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