The partnership of Malle and Stine is considering three long-term capital in- vestment proposals. Relevant data on
Question:
The partnership of Malle and Stine is considering three long-term capital in- vestment proposals. Relevant data on each project are as follows.
Salvage value is expected to be zero at the end of each project. Depreciation is computed by the straight-line method. The company's minimum rate of return is the company's cost of capital which is 11%. (Use average annual cash flows in your computations.)
Instructions
(a) Compute the cash payback period for each project. (Round to two decimals.)
(b) Compute the net present value for each project. (Round to nearest dollar.)
(c) Compute the average annual rate of return for each project. (Round to two decimals.
(d) Rank the projects on each ol the fore going bases. What project do VOU recommend?
Step by Step Answer:
Managerial Accounting Tools For Business Decision Making
ISBN: 9780471413653
2nd Canadian Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly