Compute annual rate of cash payback, and net value. (LO 1, 2,5), AN P24-1A 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 $160,000 $175,000 $200,000 Annual net income: Year 1 14,000 18,000 27,000 14,000 17,000 23,000 14,000 16,000 21,000 14,000 12,000 13,000 14,000 9,000 12,000 $ 70,000 $ 72,000 $ 96,000 XLS Total Depreciation is computed by the straight-line method with no salvage value. The com- pany's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) 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.) (b) E $(7,312) - Planning 2. Jake Company expects to have a cash balance of $45.000 on January 1, 2011. on January 1, 2017. Relevant monthly budget data for the first 2 months of 2017 are as follows. Collections from customers: January $100,000. February $160,000. Payments for direct materials: January $60,000, February $80,000. Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $26,000, February $31,000. These costs include depre- ciation of $1,000 per month. All other overhead costs are paid as incurred. Selling and administrative expenses: January $15,000. February $20,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $10,000 in cash. Jake Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $25,000. INSTRUCTIONS Prepare a cash budget for January and February. SOLUTION