Question
Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,540. Each project will last for 3 years and produce
Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,540. Each project will last for 3 years and produce the following net annual cash flows. 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%. Compute each projects payback period.
| Year | AA | BB | CC | ||||
| 1 | $7,490 | $10,700 | $13,910 | ||||
| 2 | 9,630 | 10,700 | 12,840 | ||||
| 3 | 12,840 | 10,700 | 11,770 | ||||
| Total | $29,960 | $32,100 | $38,520 |
|
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Construction accounting and financial management
Authors: Steven j. Peterson
2nd Edition
135017114, 978-0135017111
