Subject :- Accounting Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,760. Eachproject will last for 3 years and produce the following net annual cash flows.Year129,72012,960Total $30,240 $32,4003(a)AAAABB$7,560 $10,800BBThe equipment's salvage value is zero, and Sunland uses straight-line depreciation. Sunland will not accept any project with a cashpayback period over 2 years. Sunland's required rate of return is 12%. Click here to view the factor tableCC10,800сс$14,04012,960Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.)10,800. 11,880$38,880Which is the most desirable project?yearsyearsyearsThe 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 eg.-45 orparentheses e.g. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed inthe factor table provided.)AABBCCIWhich 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

The question is based on the concept of Cost Accounting. The payback period is the period in which…

Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,760. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB $7,560 $10,800 10,800 10,800. Total $30,240 $32,400 $38,880 1 2 3 9,720 12,960 CC $14,040 12,960 11,880 The equipment's salvage value is zero, and Sunland uses straight-line depreciation. Sunland will not accept any project with a cash payback period over 2 years. Sunland's required rate of return is 12%. Click here to view the factor table

Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,760. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB $7,560 $10,800 10,800 10,800. Total $30,240 $32,400 $38,880 1 2 3 9,720 12,960 CC $14,040 12,960 11,880 The equipment's salvage value is zero, and Sunland uses straight-line depreciation. Sunland will not accept any project with a cash payback period over 2 years. Sunland's required rate of return is 12%. Click here to view the factor table

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 12P

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