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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

FINANCIAL ACCOUNTING
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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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 1 2 9,720 12,960 Total $30,240 $32,400 3 (a) AA AA BB $7,560 $10,800 BB 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 CC 10,800 сс $14,040 12,960 Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) 10,800. 11,880 $38,880 Which is the most desirable project? years years years The most desirable project based on payback period is
Transcribed Image Text: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 1 2 9,720 12,960 Total $30,240 $32,400 3 (a) AA AA BB $7,560 $10,800 BB 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 CC 10,800 сс $14,040 12,960 Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) 10,800. 11,880 $38,880 Which is the most desirable project? years years years 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 eg.-45 or parentheses e.g. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) AA BB CC I 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
Transcribed Image Text: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 or parentheses e.g. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) AA BB CC I 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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