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Ivanhoe 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
Ivanhoe 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. Capital investment Annual net income: Total Year 1 2 5 Project Bono Project Edge Project Bono $170,000 Project Clayton 14,980 14,980 14,980 eTextbook and Media 14,980 Click here to view the factor table. 14,980 $74,900 Project Edge $188,000 19,260 18,190 17,120 12,840 9,630 $77,040 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) years Project Clayton $206,000 years 28,890 Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) years 24,610 22,470 13,910 12,840 $102,720 Compute the net present value for each project. (Round answers to O decimal places, eg. 125. If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in
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