Question
Oriole 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
Oriole 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 Bono | Project Edge | Project Clayton | |||||
---|---|---|---|---|---|---|---|
Capital investment | $169,600 | $185,500 | $214,000 | ||||
Annual net income: | |||||||
Year 1 | 14,840 | 19,080 | 28,620 | ||||
2 | 14,840 | 18,020 | 24,380 | ||||
3 | 14,840 | 16,960 | 22,260 | ||||
4 | 14,840 | 12,720 | 13,780 | ||||
5 | 14,840 | 9,540 | 12,720 | ||||
Total | $74,200 | $76,320 | $101,760 |
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.)
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). For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Project Bono | Project Edge | Project Clayton | |||||
---|---|---|---|---|---|---|---|
Net present value | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places |
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