Question
Bonita 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
Bonita 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 | $208,000 | ||||
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 | ||||
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 companys cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.)
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 | $ | $ | $ |
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