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 $171,200 Project Edge $187,250 Project Clayton $202,000 Capital investment Annual net income: Year 1 NMT in 14,980 14,980 14,980 14,980 14,980 $74,900 19,260 18,190 17,120 12,840 9,630 $77,040 28,890 24,610 22,470 13,910 12,840 $102,720 Total Depreciation is 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. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years 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 $ LINK TO TEXT LINK TO VIDEO 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 % % LINK TO TEXT LINK TO VIDEO 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 Edge Clayton The best project is Click if you would like to Show Work for this question: Open Show Work TABLE 1 Future Value of 1 (n) Periods 4% - .00000 5% 1.00000 6% 1.00000 7% 1.00000 8% 1.00000 9% 1.00000 10% 1.00000 11% 1.00000 12% 1.00000 15% 1.00000 0 1 1 1 .04000 1.05000 1.06000 1.07000 1 .08000 1.09000 1.10000 1.11000 1.12000 1.15000 2 1 .08160 1.10250 1.12360 1.14490 1.16640 1.18810 1.21000 1.23210 1.25440 1.32250 3 1 .12486 1.15763 1.19102 1 .22504 1 .25971 1.29503 1 .33100 1.36763 1.40493 1.52088 1 1 4 5 6 7 8 1.16986 1.21665 1.26532 1.31593 1.36857 1.21551 1.27628 1.34010 .40710 1.47746 1.26248 1.33823 1.41852 1.50363 1.59385 1.31080 .40255 1.50073 1.60578 1.71819 1.36049 1.46933 1.58687 1.71382 1.85093 1.41158 1.53862 1.67710 1.82804 1.99256 1.46410 1.61051 1.77156 .94872 .14359 1.51807 1.68506 1.87041 2.07616 2.30454 1.57352 1.76234 1.97382 2.21068 2.47596 2 .74901 2.01136 .31306 2.66002 3.05902 1 1 2 9 1 .42331 1.55133 1.68948 1 .83846 1.99900 2.17189 2.35795 2.55803 2.77308 3.51788 1.48024 1.62889 1.79085 1.96715 2.15892 2.36736 2.59374 2.83942 3.10585 4.04556 11 1.53945 2 2 .33164 2.58043 3.15176 3.47855 4.65239 1.71034 1.79586 1.89830 2.01220 .10485 2.25219 2.85312 3.13843 1.60103 2.51817 2.81267 3.49845 3.89598 5.35025 13 1.66507 1 .88565 2 .13293 2.40985 2.71962 3.06581 3.45227 3.88328 4.36349 6 .15279 14 1.73168 1.97993 2 .26090 2.57853 2 .93719 3.34173 3.79750 4.31044 4 .88711 7.07571 15 1.80094 2.07893 2 .39656 2.75903 3.17217 3.64248 4.17725 4.78459 5 .47357 8 .13706 6 1 3 16 17 18 19 20 1.87298 .94790 2.02582 .10685 .191122 2.18287 2.54035 2.29202 2 .69277 2.40662 2.85434 2.52695 3.02560 .653303.20714 2.95216 .15882 3.37993 3.61653 3.86968 3 3.42594 3.70002 .99602 4.31570 4.66096 3.97031 4.59497 4.32763 5.05447 4.71712 5 .55992 5.14166 6 .11591 5.604416.72750 5.31089 5.89509 6.54355 7.26334 8.06231 .13039 6.86604 7.68997 8.61276 9.64629 9.35762 10.76126 12.37545 14.23177 16.36654 2 2 TABLE 2 Future Value of an Annuity of 1 (0) Payments 4% 5% - 1.00000 2.05000 7% 1.000 8% 1.00000 1.00000 2.04000 6% 1.00000 2.06000 3.18360 9% 1.00000 2.09000 10% 1.00000 2.10000 11% 1.00000 2.11000 12% 1.00000 2.12000 1.00000 2.15000 2 2.0700 2.08000 3.12160 3.15250 3.2149 3 .24640 3.27810 3 .31000 3.34210 3 .37440 3.47250 4 4.24646 5.41632 4.31013 5.52563 4.37462 5.63709 4.4399 .7507 4 5 .50611 .86660 .57313 5.98471 4.64100 .10510 4.70973 6.22780 4.77933 6.35285 4.99338 6.74238 5 6 7 8 9 6 7 8 9 10 6.63298 7.89829 9.21423 10.58280 12.00611 6.80191 8.14201 9.54911 1 1.02656 12.57789 6 .97532 8.39384 9.89747 11.49132 1 3.18079 7.1533 8 .6540 10.2598 11.9780 1 3.8164 7.33592 .92280 10.63663 12.48756 14.48656 7.52334 .20044 11.02847 13.02104 15.19293 7.71561 9.48717 11.43589 13.57948 15.93743 .91286 9.78327 11.85943 14.16397 16.72201 8.11519 10.08901 12.29969 14.77566 17.54874 8.75374 11.06680 13.72682 16.78584 20.30372 11 12 13 13.48635 15.02581 16.62684 14.20679 15.91713 17.71298 14.97164 16.86994 18.88214 15.7836 17.8885 20.1406 16.64549 18.97713 21.49530 17.56029 20.14072 22.95339 18.53117 2 1.38428 2 4.52271 19.56143 22.71319 26.21164 20.65458 24.13313 28.02911 24.34928 29.00167 34.35192 14 18.29191 19.59863 21.01507 2 2.5505 24.21492 26.01919 2 7.97498 30.09492 3 2.39260 40.50471 15 16 17 18 19 20 20.02359 21.82453 23.69751 25.64541 2 7.67123 29.77808 21.57856 23.65749 25.84037 28.13238 30.53900 33.06595 2 3.27597 25.67253 28.21288 30.90565 33.75999 36.78559 25.1290 27.8881 3 0.8402 3 3.9990 3 7.3790 40.9955 27.15211 30.32428 33.75023 3 7.45024 41.44626 45.76196 29.36092 33.00340 36.97351 41.30134 46.01846 51.16012 31.77248 35.94973 40.54470 45.59917 51.15909 5 7.27500 34.40536 39.18995 44.50084 50.39593 5 6.93949 64.20283 37.27972 42.75328 48.88367 55.74972 6 3.43968 72.05244 47.58041 55.71747 65.07509 7 5.83636 88.21181 102.44358