Ivanhoes Custom Construction Company is considering three new projects, each requiring an equipment investment of $22,880. Each project will last for 3 years and produce the following net annual cash flows.

Year		AA		BB		CC
1		$7,280		$10,400		$13,520
2		9,360		10,400		12,480
3		12,480		10,400		11,440
Total		$29,120		$31,200		$37,440

The equipments salvage value is zero, and Ivanhoe uses straight-line depreciation. Ivanhoe will not accept any project with a cash payback period over 2 years. Ivanhoes required rate of return is 12%. Click here to view PV table. (a) Compute each projects payback period. (Round answers to 2 decimal places, e.g. 15.25.)

AA		enter the number of years rounded to 2 decimal places	years
BB		enter the number of years rounded to 2 decimal places	years
CC		enter the 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