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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 $168,000 $183,750 $210,000 Annual net income: Year 1 14,700 18,900 28,350 2 14,700 17,850 24,150 3 14,700 16,800 22,050 4 14,700 12,600 13,650 5 14,700 9,450 12,600 Total $73,500 $75,600 $100,800 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 PV table. Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono Project Edge 3.48 years 3.40 years Project Clayton eTextbook and Media 3.17 years Your answer is partially correct. Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the numb the factor table provided.) Project Bono Project Edge Project Clayton Net present value $ -6089 $ -7676 $ 2373 eTextbook and Media * Your answer is incorrect. 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%.) Annual rate of return eTextbook and Media Project Bono Project Edge Project Clayton 8.75 % 8.23 % 9.60 % Your answer is partially correct. 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 3: 2 2: Edge 2% 3 3 Clayton 1÷ 1÷ 1÷ The best project is Clayton eTextbook and Media

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 $168,000 $183,750 $210,000 Annual net income: Year 1 14,700 18,900 28,350 2 14,700 17,850 24,150 3 14,700 16,800 22,050 4 14,700 12,600 13,650 5 14,700 9,450 12,600 Total $73,500 $75,600 $100,800 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 PV table. Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono Project Edge 3.48 years 3.40 years Project Clayton eTextbook and Media 3.17 years Your answer is partially correct. Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the numb the factor table provided.) Project Bono Project Edge Project Clayton Net present value $ -6089 $ -7676 $ 2373 eTextbook and Media * Your answer is incorrect. 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%.) Annual rate of return eTextbook and Media Project Bono Project Edge Project Clayton 8.75 % 8.23 % 9.60 % Your answer is partially correct. 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 3: 2 2: Edge 2% 3 3 Clayton 1÷ 1÷ 1÷ The best project is Clayton eTextbook and Media

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...
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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 $168,000 $183,750 $210,000 Annual net income: Year 1 14,700 18,900 28,350 2 14,700 17,850 24,150 3 14,700 16,800 22,050 4 14,700 12,600 13,650 5 14,700 9,450 12,600 Total $73,500 $75,600 $100,800 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 PV table. Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono Project Edge 3.48 years 3.40 years Project Clayton eTextbook and Media 3.17 years Your answer is partially correct. Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the numb the factor table provided.) Project Bono Project Edge Project Clayton Net present value $ -6089 $ -7676 $ 2373 eTextbook and Media
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 $168,000 $183,750 $210,000 Annual net income: Year 1 14,700 18,900 28,350 2 14,700 17,850 24,150 3 14,700 16,800 22,050 4 14,700 12,600 13,650 5 14,700 9,450 12,600 Total $73,500 $75,600 $100,800 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 PV table. Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono Project Edge 3.48 years 3.40 years Project Clayton eTextbook and Media 3.17 years Your answer is partially correct. Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the numb the factor table provided.) Project Bono Project Edge Project Clayton Net present value $ -6089 $ -7676 $ 2373 eTextbook and Media
* Your answer is incorrect. 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%.) Annual rate of return eTextbook and Media Project Bono Project Edge Project Clayton 8.75 % 8.23 % 9.60 % Your answer is partially correct. 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 3: 2 2: Edge 2% 3 3 Clayton 1÷ 1÷ 1÷ The best project is Clayton eTextbook and Media
Transcribed Image Text:* Your answer is incorrect. 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%.) Annual rate of return eTextbook and Media Project Bono Project Edge Project Clayton 8.75 % 8.23 % 9.60 % Your answer is partially correct. 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 3: 2 2: Edge 2% 3 3 Clayton 1÷ 1÷ 1÷ The best project is Clayton eTextbook and Media
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