Compute annual rate of return, cash payback, and net present value

P24-1A Compute annual rate of return, cash payback, and net present value
Henkel 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 Kilo	Project Lima	Project Oscar
	Capital investment	$150,000	$165,000	$200,000
	Annual net income:
	Year 1	14,000	18,000	27,000
	2	14,000	17,000	23,000
	3	14,000	16,000	21,000
	4	14,000	12,000	13,000
	5	14,000	9,000	12,000
	Total	70,000	72,000	96,000
Depreciation is computed by the straight-line method with no salvage value. The
company'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.)
(c ) Compute the annual rate of return for each project. (Round to two decimals.)
(Hint: Use average annual net income in your computation.)
(d) Rank the projects on each of the foregoing bases. Which project do you recommend?
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a)	Project Kilo
	Net income	Value		Investment	Value
	Depreciation	Value		Annual net cash flows	Value
	Annual net cash flows	Value		Payback period	Value
	Project Lima
		Net Annual	Cumulative
	Year	Cash Flow	Net Cash Flow
	1	Value	Value
	2	Value	Value
	3	Value	Value
	4	Value	Value
	5	Value	Value
	Project Oscar
		Net Annual	Cumulative
	Year	Cash Flow	Net Cash Flow
	1	Value	Value
	2	Value	Value
	3	Value	Value
	4	Value	Value
	5	Value	Value
(b)	Project Kilo					Present
	Item		Amount	Years	PV Factor	Value
	Net annual cash flows		Value	1-5	3.35216	?
	Capital investment					Value
	Negative net present value					?
			Project Lima		Project Oscar
		Discount	Cash	Present	Cash	Present
	Year	Factor	Flow	Value	Flow	Value
	1	0.86957	Value	?	Value	?
	2	0.75614	Value	?	Value	?
	3	0.65752	Value	?	Value	?
	4	0.57175	Value	?	Value	?
	5	0.49718	Value	?	Value	?
	Total		Value	?	Value	?
	Capital Investment			Value		Value
	Net present value			?		?
(c)			Project Kilo	Project Lima	Project Oscar
	Total net income		Value	Value	Value
	Useful life		5 years	5 years	5 years
	Average annual net income		?	?	?
	Original Investment		Value	Value	Value
	Value at end of useful life		Value	Value	Value
	Average investment		?	?	?
	Average annual net income		Value	Value	Value
	Average investment		Value	Value	Value
	Annual rate of return		?	?	?
			Net	Annual
(d)	Project	Cash Payback	Present Value	Rate of Return
	Kilo	Value	Value	Value
	Lima	Value	Value	Value
	Oscar	Value	Value	Value