a.) compute each projects payback period

b.) compute the net present value of each project

- which is the most desirable and least desirable?

Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,100. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $7,350 $10.500 $13,650 2 Unresolved 10.500 12,600 3 12,600 10.500 11.550 Total $29.400 $31.500 $37 800 The equipment's salvage value is zero, and Doug uses straight line depreciation. Doug will not accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%. Click here to view PV table

Answer rating: 100% (QA)

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