Subject - Acounting Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840. Eachproject will last for 3 years and produce the following net annual cash flows.Year12AAAABBBB10,980314,640Total $34,160 $36,600CC$8,540 $12,200 $15,86014,64013,42012,20012,200The equipment's salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash paybackperiod over 2 years. Doug's required rate of return is 12%. Click here to view the factor table.(a)CCCompute each project's payback period. (Round answers to 2 decimal places, eg. 15.25.)$43,920Which is the most desirable project?yearsyearsyearsThe most desirable project based on payback period is Which is the most desirable project?The most desirable project based on payback period isWhich is the least desirable project?The least desirable project based on payback period is(b)Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 orparentheses e.g. (45). Round final answers to the nearest whole dollar, eg. 5,275. For calculation purposes, use 5 decimal places as displaythe factor table provided.)AABBCCWhich is the most desirable project based on net present value?The most desirable project based on net present value isWhich is the least desirable project based on net present value?The least desirable project based on net present value is

Year Cash flows of AA Cash flows of BB Cash flows of CC 0 $ -26,840.00 $…

Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840. Each project will last for 3 years and produce the following net annual cash flows. Year 1 2 3 AA AA BB CC $8,540 $12,200 10,980 BB 14,640 Total $34,160 $36,600 12,200 12,200 cc $15,860 14,640 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. (a) Compute each project's payback period. (Round answers to 2 decimal places, eg.15.25.) 13,420 $43,920 years years years

Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840. Each project will last for 3 years and produce the following net annual cash flows. Year 1 2 3 AA AA BB CC $8,540 $12,200 10,980 BB 14,640 Total $34,160 $36,600 12,200 12,200 cc $15,860 14,640 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. (a) Compute each project's payback period. (Round answers to 2 decimal places, eg.15.25.) 13,420 $43,920 years years years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Subject - Acounting

Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840. Each
project will last for 3 years and produce the following net annual cash flows.
Year
1
2
AA
AA
BB
BB
10,980
3
14,640
Total $34,160 $36,600
CC
$8,540 $12,200 $15,860
14,640
13,420
12,200
12,200
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.
(a)
CC
Compute each project's payback period. (Round answers to 2 decimal places, eg. 15.25.)
$43,920
Which is the most desirable project?
years
years
years
The most desirable project based on payback period is

Which is the most desirable project?
The most desirable project based on payback period is
Which is the least desirable project?
The least desirable project based on payback period is
(b)
Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or
parentheses e.g. (45). Round final answers to the nearest whole dollar, eg. 5,275. For calculation purposes, use 5 decimal places as display
the factor table provided.)
AA
BB
CC
Which is the most desirable project based on net present value?
The most desirable project based on net present value is
Which is the least desirable project based on net present value?
The least desirable project based on net present value is

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