Question
Problem 24-1A Henkel Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project
Problem 24-1A
Henkel 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 Kilo Project Lima Project Oscar
Capital investment $162,750 $173,250 $202,800
Annual net income:
Year1 13,650 18,375 28,875
2 13,650 17,325 23,625
3 13,650 16,275 22,575
4 13,650 12,075 14,175
5 13,650 8,925 13,125
Total $68,250 $72,975 $102,375
Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.)
Click here to view the factor table.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
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Compute the cash payback period for each project.(Round answers to 2 decimal places, e.g. 10.50.)
Project Kilo years
Project Lima years
Project Oscar years
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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).)
$ $ $
Project Kilo Project Lima Project Oscar
Net present value
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Compute the annual rate of return for each project. (Hint:Use average annual net income in your computation.)(Round answers to 2 decimal places, e.g. 10.50.)
% % %
Project Kilo Project Lima Project Oscar
Annual rate of return
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