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Crane 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

Crane 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 $168,000 $183,750 $210,000
Annual net income:
Year 1 14,700 18,900 28,350
2 14,700 17,850 24,150
3 14,700 16,800 22,050
4 14,700 12,600 13,650
5 14,700 9,450 12,600
Total $73,500 $75,600 $100,800

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.) Click here to view PV table.

(a)

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Your answer is correct.

Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)

Project Bono enter the cash payback period in years rounded to 2 decimal places years
Project Edge enter the cash payback period in years rounded to 2 decimal places years
Project Clayton enter the cash payback period in years rounded to 2 decimal places years

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(b)

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Your answer is correct.

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 $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places

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(c)

Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%.)

Project Bono Project Edge Project Clayton
Annual rate of return enter percentages rounded to 2 decimal places % enter percentages rounded to 2 decimal places % enter percentages rounded to 2 decimal places %

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