Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,180. Each project will last for 3 years and produce the following net annual cash flows.

Year		AA		BB		CC
1		$8,330		$11,900		$15,470
2		10,710		11,900		14,280
3		14,280		11,900		13,090
Total		$33,320		$35,700		$42,840

The equipments salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash payback period over 2 years. Dougs required rate of return is 12%. Click here to view the factor table. (a) Compute each projects payback period. (Round answers to 2 decimal places, e.g. 15.25.)

AA		Enter a number of years rounded to 2 decimal places	years
BB		Enter a number of years rounded to 2 decimal places	years
CC		Enter a number of years rounded to 2 decimal places	years

Which is the most desirable project?

The most desirable project based on payback period is

Project AAProject BBProject CC

Which is the least desirable project?

The least desirable project based on payback period is

Project BBProject AAProject CC

(b) Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

AA		enter a dollar amount rounded to 0 decimal places
BB		enter a dollar amount rounded to 0 decimal places
CC		enter a dollar amount rounded to 0 decimal places

Which is the most desirable project based on net present value?

The most desirable project based on net present value is Project AAProject CCProject BB.

Which is the least desirable project based on net present value?

The least desirable project based on net present value is Project CCProject AAProject BB.