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Problem 25-01A U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project

Problem 25-01A

U3 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 $171,200 $187,250 $208,000
Annual net income:
Year 1 14,980 19,260 28,890
2 14,980 18,190 24,610
3 14,980 17,120 22,470
4 14,980 12,840 13,910
5 14,980 9,630 12,840
Total $74,900 $77,040 $102,720
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.) Click here to view the factor table.
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
Project Bono enter the cash payback period in years rounded to 2 decimal places

years
Project Edge enter the cash payback period in years rounded to 2 decimal places

years
Project Clayton enter the cash payback period in years rounded to 2 decimal places

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). 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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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 Bono Project Edge Project Clayton
Annual rate of return enter percentages rounded to 2 decimal places

%
enter percentages rounded to 2 decimal places

%
enter percentages rounded to 2 decimal places

%

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Rank the projects on each of the foregoing bases. Which project do you recommend?
Project Cash Payback Net Present Value Annual Rate of Return
Bono select a ranking number

select a ranking number

select a ranking number

Edge select a ranking number

select a ranking number

select a ranking number

Clayton select a ranking number

select a ranking number

select a ranking number

The best project is select a project

.

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