DEPRICIATION QUES

Maxima Construction is considering 2 long-term capital investment projects. Each investment has a useful life of 7 years. Relevant data for each project follows: Project Project Capital Investment 400,000 360,000 Annual $ $ Profit 50,000 35,000 Additional Information: Depreciation is calculated by the straight-line method with no residual (salvage) value. The company's cost of capital rate is 4%. Refer to the excerpts of the Present Value Tables provided below. Required: The company's cost of capital rate is 4%. Refer to the excerpts of the Present Value Tables provided below. Required: 1. Compute the cash payback period for each project. (Round to 2 decimals) (2 marks per project, 4 marks total) 2. Compute the net present value for each project. (Round to nearest dollar) (2 marks per project, 4 marks total) 3. Which Project would you recommend and why? (2 marks)