The Three Stages partnership is considering three long-term capital investment proposals. Each investment has a useful life of five years. Relevant data on each project are as follows:

		Project Main			Project Odyssey			Project Duo
Capital investment:		$159,000			$169,600			$210,000
Annual net income:
Year 1		$13,780			$19,080			$28,620
2		13,780			18,020			23,320
3		13,780			16,960			22,260
4		13,780			12,720			13,780
5		13,780			9,540			12,720
Total		$68,900			$76,320			$100,700

Depreciation is calculated by the straight-line method and there is no salvage value. The companys cost of capital is 15%. (Use average net annual cash flows in your calculations.)

Calculate the cash payback period for each project. (Round answers to 2 decimal places, e.g. 15.25.)

		Payback period
Project Main			years
Project Odyssey			years
Project Duo			years

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

Calculate the net present value for each project. (If the answer is negative, use either a negative sign preceding the number e.g. -5,275 or parentheses e.g. (5,275). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Click here to view PV table.

		Net present value
Project Main		$
Project Odyssey		$
Project Duo		$

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

Calculate the annual rate of return for each project. (Round answers to 2 decimal places, e.g. 15.25%.)

		Annual rate of return
Project Main			%
Project Odyssey			%
Project Duo			%

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

Rank the projects based on each of your answers for parts (a), (b), and (c).

Project		Cash Payback		Net Present Value		Annual Rate of Return
Main		123		123		123
Odyssey		123		123		123
Duo		123		123		123

Which project do you recommend?

Project DuoProject MainProject Odyssey