Sarasotas Custom Construction Company is considering three new projects, each requiring an equipment investment of $25,300. Each project will last for 3 years and produce the following net annual cash flows.

Year		AA		BB		CC
1		$8,050		$11,500		$14,950
2		10,350		11,500		13,800
3		13,800		11,500		12,650
Total		$32,200		$34,500		$41,400

The equipments salvage value is zero, and Sarasota uses straight-line depreciation. Sarasota will not accept any project with a cash payback period over 2 years. Sarasotas required rate of return is 12%. (a) Compute each projects payback period.

AA			years
BB			years
CC			years

(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
BB
CC

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

The most desirable project based on net present value is