Project Bono Project Edge Project Clayton Capital investment $172,000 $190,000 $214,000 Annual net income: Year 1 15,120 19,440 29,160 2 15,120 18,360 24,840 3 15,120 17,280 22,680 4 15,120 12,960 14,040 5 15,120 9,720 12,960 Total $75,600 $77,760 $103,680
Project Bono Project Edge Project Clayton Capital investment $172,000 $190,000 $214,000 Annual net income: Year 1 15,120 19,440 29,160 2 15,120 18,360 24,840 3 15,120 17,280 22,680 4 15,120 12,960 14,040 5 15,120 9,720 12,960 Total $75,600 $77,760 $103,680
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
vnt.2
Transcribed Image Text:Sheridan 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.
Project Bono
Project Edge
Project Clayton
Capital investment
$172,000
$190,000
$214,000
Annual net income:
Year 1
15,120
19,440
29,160
2
15,120
18,360
24,840
3
15,120
17,280
22,680
4
15,120
12,960
14,040
5
15,120
9,720
12,960
Total
$75,600
$77,760
$103,680
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.)
Click here to view the factor table.
(a)
× Your answer is incorrect.
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
Project Bono
11.38
years
Project Edge
9.77
years
Project Clayton
7.34
years
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