ougs Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,500. Each project will last for 3 years and produce the following net annual cash flows.

Year		AA		BB		CC
1		$8,750		$12,500		$16,250
2		Unresolved		12,500		15,000
3		15,000		12,500		13,750
Total		$35,000		$37,500		$45,000

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

AA		Enter a number of years rounded to 2 decimal places	years
BB		Enter a number of years rounded to 2 decimal places	years
CC		Enter a 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 Project BBProject AAProject CC

(b) Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

AA		enter a dollar amount rounded to 0 decimal places
BB		enter a dollar amount rounded to 0 decimal places
CC		enter a dollar amount rounded to 0 decimal places

Which is the most desirable project based on net present value?

The most desirable project based on net present value is select a project Project CCProject BBProject AA.

Which is the least desirable project based on net present value?

The least desirable project based on net present value is select a project