Novak Manufacturing Company is considering three new projects, each requiring an equipment investment of $25,400. Each project will last for 3 years and produce the following cash flows.

Year		AA		BB		CC
1		$8,100		$11,000		$12,100
2		10,100		11,000		11,100
3		16,100		11,000		10,100
Total		$34,300		$33,000		$33,300

The salvage value for each of the projects is zero. Novak uses straight-line depreciation. Novak will not accept any project with a payback period over 2.2 years. Novak's minimum required rate of return is 12%. Click here to view PV tables.

(a)

Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.)

		AA		BB		CC
Payback period		enter a number of years rounded to 2 decimal places years		enter a number of years rounded to 2 decimal places years		enter a number of years rounded to 2 decimal places years

Indicating the most desirable project and the least desirable project using this method.

Most desirable		select a project Project CCProject AAProject BB
Least desirable		select a project Project BBProject CCProject AA