Question
Oriole's Custom Construction Company is considering three new projects, each requiring an equipment investment of $25,520. Each project will last for 3 years and produce
Oriole's Custom Construction Company is considering three new projects, each requiring an equipment investment of $25,520. Each project will last for 3 years and produce the following net annual cash flows.
| Year | AA | BB | CC | ||||
|---|---|---|---|---|---|---|---|
| 1 | $8,120 | $11,600 | $15,080 | ||||
| 2 | 10,440 | 11,600 | 13,920 | ||||
| 3 | 13,920 | 11,600 | 12,760 | ||||
| Total | $32,480 | $34,800 | $41,760 |
The equipment's salvage value is zero, and Oriole uses straight-line depreciation. Oriole will not accept any project with a cash payback period over 2 years. Oriole's required rate of return is 12%.
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Managerial Accounting Tools for business decision making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
6th Edition
978-0470477144, 1118096894, 9781118214657, 470477148, 111821465X, 978-1118096895
