Crane's Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,280. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,680 $12,400 $16,120 2 11,160 12,400 14,880 3 14,880 12,400 13,640 Total $34,720 $37,200 $44,640 The equipment's salvage value is zero, and Crane uses straight-line depreciation. Crane will not accept any project with a cash payback period over 2 years. Crane's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA BB BB years years CC years
Crane's Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,280. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,680 $12,400 $16,120 2 11,160 12,400 14,880 3 14,880 12,400 13,640 Total $34,720 $37,200 $44,640 The equipment's salvage value is zero, and Crane uses straight-line depreciation. Crane will not accept any project with a cash payback period over 2 years. Crane's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA BB BB years years CC years
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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Question
![Crane's Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,280. Each
project will last for 3 years and produce the following net annual cash flows.
Year
AA
BB
CC
1
$8,680
$12,400
$16,120
2
11,160
12,400
14,880
3
14,880
12,400
13,640
Total $34,720
$37,200
$44,640
The equipment's salvage value is zero, and Crane uses straight-line depreciation. Crane will not accept any project with a cash payback
period over 2 years. Crane's required rate of return is 12%. Click here to view PV table.
(a)
Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.)
AA
BB
BB
years
years
CC
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F84f7a34a-f905-4c6a-93c6-17dbe4124bd9%2Fb6df254e-db74-4362-bc11-78a0ae86ba83%2Fycluq4m1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Crane's Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,280. Each
project will last for 3 years and produce the following net annual cash flows.
Year
AA
BB
CC
1
$8,680
$12,400
$16,120
2
11,160
12,400
14,880
3
14,880
12,400
13,640
Total $34,720
$37,200
$44,640
The equipment's salvage value is zero, and Crane uses straight-line depreciation. Crane will not accept any project with a cash payback
period over 2 years. Crane's required rate of return is 12%. Click here to view PV table.
(a)
Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.)
AA
BB
BB
years
years
CC
years
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