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Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $28,380. Each project will last for 3 years and produce
Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $28,380. Each project will last for 3 years and produce the following net annual cash flows.
Year | AA | BB | CC | |||
1 | $9,030 | $12,900 | $16,770 | |||
2 | 11,610 | 12,900 | 15,480 | |||
3 | 15,480 | 12,900 | 14,190 | |||
Total | $36,120 | $38,700 | $46,440 |
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. (Round answers to 2 decimal places, e.g. 15.25.)AA | years | |
BB | years | |
CC | years |
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