Question
Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,180. Each project will last for 3 years and
Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $26,180. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $8,330 $11,900 $15,470 2 10,710 11,900 14,280 3 14,280 11,900 13,090 Total $33,320 $35,700 $42,840 The equipment's salvage value is zero, and Sunland uses straight-line depreciation. Sunland will not accept any project with a cash payback period over 2 years. Sunland's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA BB CC years years years Which is the most desirable project? The most desirable project based on payback period is
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Managerial Accounting Tools for business decision making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
6th Edition
978-0470477144, 1118096894, 9781118214657, 470477148, 111821465X, 978-1118096895
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