P$3.$ U$3$ 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 A Project B Project C

Capital Investment $$540,000$ $ $$650,000$$$750,000$

Net Income Year $1180,000,260,000,270,000$

Net Income Year $2180,000,230,000,230,000$

Net Income Year $3180,000,210,000,210,000$

Net Income Year $4180,000,190,000,200,000$

Net Income Year $5180,000,160,000,190,000$

Total income $900,000,1,050,0001,100,000$

Depreciation is computed by the straight$-$line method with no salvage value. The company's cost of capital is $12\%.($Assume that cash flows occur evenly throughout the year.$)$

Instructions

a$.$ Compute the cash payback period for each project. $($Round to two decimals.$)$

b$.$ Compute the net present value for each project. $($Round to the nearest dollar.$)$

c$.$ Compute the profitability index for each project

d$.$ Compute the annual rate of return for each project. $($Round to two decimals.$)($Hint: Use average annual net income in your computation.$)$

e$.$ Rank the projects on each of the preceding bases. Which project do you recommend?