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Exercise 16-2 Pronghorn's Custom Construction Company is considering three new projects, each requiring an equipment investment of $24,860. Each project will last for 3 years
Exercise 16-2 Pronghorn's Custom Construction Company is considering three new projects, each requiring an equipment investment of $24,860. Each project will last for 3 years and produce the following net annual cash flows. Year 1 %7,910 $11,300 $14,690 2 10,170 11,300 13,560 3 13,560 11,300 12,430 Total $31,640 $33,900 $40,680 The equipment's salvage value is zero, and Pronghorn uses straight-line depreciation. Pronghorn will not accept any project with a cash payback period over 2 years. Pronghorn's required rate of return is 12%. Click here to view PV table. Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) 2.5 years 2.2 years 1.75 years
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