Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,500. Each project will last for 3 years and produce the following net annual cash flows.

Year AA BB CC

1 $8,750$12,500$16,250

211,25012,50015,000

315,00012,50013,750

Total$35,000$37,500$45,000

The equipment's salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%.Click here to view PV table.

Each project's payback period

Which is the most desirable project?

Which is the least desirable project?

The net present value of each project.

Which is the most desirable project?

Which is the least desirable project?