Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $19,950. Each project will last for 3 years and produce the following net annual cash flows.

Year		AA		BB		CC
1		$8,505		$11,078		$13,755
2		10,920		11,078		10,605
3		15,855		11,078		11,655
Total		$35,280		$33,234		$36,015

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%.

Questions:

1. Compute each projects payback period.

AA 2.03 years

BB 1.8 years

CC ___ years

2. Compute the net present value of each project.

AA ____

BB ____

CC ____