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.

			Project Kilo		Project Lima		Project Oscar
Capital investment			$165,850		$176,550		$200,850
Annual net income:
Year	1		13,910		18,725		29,425
	2		13,910		17,655		24,075
	3		13,910		16,585		23,005
	4		13,910		12,305		14,445
	5		13,910		9,095		13,375
Total			$69,550		$74,365		$104,325

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.) Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)

Project Kilo		years
Project Lima		years
Project Oscar		years

Compute the net present value for each project. (Round answers to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).)

		Project Kilo		Project Lima		Project Oscar
Net present value		$		$		$

Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50.)

		Project Kilo		Project Lima		Project Oscar
Annual rate of return		%		%		%

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

Project		Cash Payback		Net Present Value		Annual Rate of Return
Kilo		1, 2 or 3		1, 2 or 3		1, 2 or 3
Lima		1, 2 or 3		1, 2 or 3		1, 2 or 3
Oscar		1, 2 or 3		1, 2 or 3		1, 2 or 3

The best project is

Lima, Oscar, or Kilo