Pina Colada Manufacturing Company is considering three new projects, each requiring an equipment investment of $25,600. Each project will last for 3 years and produce the following cash flows. Year 1 2 3 Total AA BB $8,200 $11,100 $12,200 11,200 10,200 $33,600 (a) 10,200 16,200 $34,600 11,100 11,100 Payback period CC $33,300 The salvage value for each of the projects is zero. Pina Colada uses straight-line depreciation. Pina Colada will not accept any project with a payback period over 2.2 years. Pina Colada's minimum required rate of return is 12%. Click here to view PV tables. Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.) AA years 88 years CC years
Pina Colada Manufacturing Company is considering three new projects, each requiring an equipment investment of $25,600. Each project will last for 3 years and produce the following cash flows. Year 1 2 3 Total AA BB $8,200 $11,100 $12,200 11,200 10,200 $33,600 (a) 10,200 16,200 $34,600 11,100 11,100 Payback period CC $33,300 The salvage value for each of the projects is zero. Pina Colada uses straight-line depreciation. Pina Colada will not accept any project with a payback period over 2.2 years. Pina Colada's minimum required rate of return is 12%. Click here to view PV tables. Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.) AA years 88 years CC years
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EA: Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and...
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Question
![(b)
Your answer is partially correct.
Compute the net present value of each project. (Use the above table.) (Round factor values to 5 decimal places, e.g. 1.25124
and final answers to 0 decimal places, e.g. 5,275.)
Net present value $
Most desirable
Indicating the most desirable project and the least desirable project using this method.
Least desirable
Project CC
AA
Project B
BB
CC](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa1eb490d-276b-4dba-89f0-0aea9f156ecd%2Fa6e9c939-429a-40b2-a97a-5245d795ca74%2Fi0he8zo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(b)
Your answer is partially correct.
Compute the net present value of each project. (Use the above table.) (Round factor values to 5 decimal places, e.g. 1.25124
and final answers to 0 decimal places, e.g. 5,275.)
Net present value $
Most desirable
Indicating the most desirable project and the least desirable project using this method.
Least desirable
Project CC
AA
Project B
BB
CC
![Pina Colada Manufacturing Company is considering three new projects, each requiring an equipment investment of $25,600. Each
project will last for 3 years and produce the following cash flows.
Year
1
2
3
AA
BB
$8,200 $11,100 $12,200
11,200
10,200
16,200
Total $34,600
(a)
11,100
11,100
Payback period
$33,300
CC
10,200
The salvage value for each of the projects is zero. Pina Colada uses straight-line depreciation. Pina Colada will not accept any project
with a payback period over 2.2 years, Pina Colada's minimum required rate of return is 12%.
Click here to view PV tables.
$33,600
Compute each project's payback period: (Round answers to 2 decimal places, e.g. 52.75.)
AA
years
BB
years
CC
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa1eb490d-276b-4dba-89f0-0aea9f156ecd%2Fa6e9c939-429a-40b2-a97a-5245d795ca74%2Fbik8ei9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Pina Colada Manufacturing Company is considering three new projects, each requiring an equipment investment of $25,600. Each
project will last for 3 years and produce the following cash flows.
Year
1
2
3
AA
BB
$8,200 $11,100 $12,200
11,200
10,200
16,200
Total $34,600
(a)
11,100
11,100
Payback period
$33,300
CC
10,200
The salvage value for each of the projects is zero. Pina Colada uses straight-line depreciation. Pina Colada will not accept any project
with a payback period over 2.2 years, Pina Colada's minimum required rate of return is 12%.
Click here to view PV tables.
$33,600
Compute each project's payback period: (Round answers to 2 decimal places, e.g. 52.75.)
AA
years
BB
years
CC
years
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