Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,100. Each project will last for 3 years and produce the following net annual cash flows. Year 1 2 3 (a) AA AA $7,350 9,450 12,600 BB BB Total $29,400 $31,500 CC $10,500 10,500 10,500 The equipment's salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%. Click here to view the factor table. CC Which is the most irable project? $13,650 Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) 12,600 Which is the least desirable project? 11.550 $37,800 years years years The most desirable project based on payback period is The least desirable project based on payback period is

Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,100. Each project will last for 3 years and produce the following net annual cash flows. Year 1 2 3 (a) AA AA $7,350 9,450 12,600 BB BB Total $29,400 $31,500 CC $10,500 10,500 10,500 The equipment's salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%. Click here to view the factor table. CC Which is the most irable project? $13,650 Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) 12,600 Which is the least desirable project? 11.550 $37,800 years years years The most desirable project based on payback period is The least desirable project based on payback period is

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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