Dougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,180. Each project will last for 3 years and produce the following net annual cash flows.

Year		AA		BB		CC
1		$8,330		$11,900		$15,470
2		10,710		11,900		14,280
3		14,280		11,900		13,090
Total		$33,320		$35,700		$42,840

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%. Click here to view the factor table. (a) Compute each projects payback period. (Round answers to 2 decimal places, e.g. 15.25.)

AA		Enter a number of years rounded to 2 decimal places	years
BB		Enter a number of years rounded to 2 decimal places	years
CC		Enter a number of years rounded to 2 decimal places	years

Which is the most desirable project?

The most desirable project based on payback period is

select a project Project AAProject BBProject CC

Which is the least desirable project?

The least desirable project based on payback period is

select a project Project BBProject AAProject CC