Henkel Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows.

Depreciation is computed by the straight-line method with no salvage value. The companys cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

A. Compute the cash payback period for each project.

B. Compute the net present value for each project.

C. Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.)

D. Rank the projects on each of the foregoing bases. Which project do you recommend?

Project Kilo $167,400 Project Lima $178,200 Project Oscar $198,900 Capital investment Annual net income: 29,700 24,300 23,220 14,580 13,500 $105,300 Year 1 14,040 14,040 14,040 14,040 14,040 $70,200 18,900 17,820 16,740 12,420 9,180 $75,060 0 Total