Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $22,440. Each project will last for 3 years and produce the following net annual cash flows.

YEAR AA. BB. CC.

1		$7,140		$10,200		$13,260
2		9,180		10,200		12,240
3		12,240		10,200		11,220
Total		$28,560		$30,600		$36,720

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%.

(a)

Compute each projects payback period. (Round answers to 2 decimal places, e.g. 15.25.)

AA ____ years

BB ____ years

CC ____ years

The most desirable project based on payback period is ____.

The least desirable project based on payback period is ____.

(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 ___.

BB___.

CC___.

The most desirable project based on net present value is ___.

The least desirable project based on net present value is ___.