Wildhorse's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,540 $12,200 $15,860 2 10,980 12,200 14,640 3 14,640 12,200 13,420 Total $34,160 $36,600 $43,920 The equipment's salvage value is zero, and Wildhorse uses straight-line depreciation. Wildhorse will not accept any project with a cash payback period over 2 years. Wildhorse's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA BB years years CC years

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Wildhorse's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840.
Each project will last for 3 years and produce the following net annual cash flows.
Year
AA
BB
CC
1
$8,540
$12,200
$15,860
2
10,980
12,200
14,640
3
14,640
12,200
13,420
Total $34,160 $36,600
$43,920
The equipment's salvage value is zero, and Wildhorse uses straight-line depreciation. Wildhorse will not accept any project with a cash
payback period over 2 years. Wildhorse's required rate of return is 12%. Click here to view PV table.
(a)
Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.)
AA
BB
years
years
CC
years
Transcribed Image Text:Wildhorse's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,840. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,540 $12,200 $15,860 2 10,980 12,200 14,640 3 14,640 12,200 13,420 Total $34,160 $36,600 $43,920 The equipment's salvage value is zero, and Wildhorse uses straight-line depreciation. Wildhorse will not accept any project with a cash payback period over 2 years. Wildhorse's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA BB years years CC years
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