U3 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 $164,800 $180,250 $204,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 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. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years eTextbook and Media Compute the net present value for each project. (Round answers to O decimal places, eg. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project Bono Project Edge Project Clayton Net present value $ eTextbook and Media Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%) Project Bono Project Edge Project Clayton Annual rate of return
U3 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 $164,800 $180,250 $204,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 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. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years eTextbook and Media Compute the net present value for each project. (Round answers to O decimal places, eg. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project Bono Project Edge Project Clayton Net present value $ eTextbook and Media Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%) Project Bono Project Edge Project Clayton Annual rate of return
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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Transcribed Image Text:U3 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
$164,800
$180,250
$204,000
Annual net income:
Year 1
14,420
18,540
27,810
14,420
17.510
23,690
3
14,420
16,480
21,630
14.420
12.360
13,390
5
14,420
9,270
12,360
Total
$72,100
$74,160
$98,880
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.
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
Project Bono
years
Project Edge
years
Project Clayton
years
eTextbook and Media
Compute the net present value for each project. (Round answers to 0 decimal places, e.g. 125. If the net present value is negative,
use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as
displayed in the factor table provided.)
Project Bono
Project Edge
Project Clayton
Net present value
$
24
eTextbook and Media
Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers
to 2 decimal places, e.g. 10.50%.)
Project Bono
Project Edge
Project Clayton
Annual rate of return
%
%
Transcribed Image Text:Rank the projects on each of the foregoing bases. Which project do you recommend?
Net
Annual
Project
Cash Payback
Present Value
Rate of Return
Bono
Edge
Clayton
The best project is
>
>
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