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 $163,200 Project Edge $178,500 Project Clayton $202,000 Capital investment Annual net income: Year 1 2 3 14,280 14,280 14,280 14,280 14,280 $71,400 18,360 17,340 16,320 12,240 9,180 $73,440 27,540 23,460 21,420 13,260 12,240 4 5 Total $97,920 Depreciation 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. Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono 3.48 years Project Edge 3.40 years Project Clayton 3.16 years Your answer is partially correct. Try again. 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 (5,377) (7,458 2,865 LINK TO TEXT LINK TO VIDEO x Your answer is incorrect. Try again. 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 X 9.70 Annual rate of retum 8.75 8.23 LINK TO TEXT LINK TO VIDEO Your answer is correct. Rank the projects on each of the foregoing bases. Which project do you recommend? Net Present Value Annual Rate of Return Project Cash Payback Bono Edge 37 34 Clayton The best project is Clayton