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 Project Edge Project Clayton

Capital investment $164,800 $180,250 $206,000

Annual net income:

Year1 14,420 18,540 27,810

2 14,420 17,510 23,690

3 14,420 16,480 21,630

4 14,420 12,360 13,390

5 14,420 9,270 12,360

Total $72,100 $74,160 $98,880

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 PV table.

Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)

Project Bono enter the cash payback period in years for the project rounded to 2 decimal places

years

Project Edge enter the cash payback period in years for the project rounded to 2 decimal places

years

Project Clayton enter the cash payback period in years for the project rounded to 2 decimal places

years

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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 $enter a dollar amount rounded to 0 decimal places

$enter a dollar amount rounded to 0 decimal places

$enter a dollar amount rounded to 0 decimal places

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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 enter a percentage number rounded to 2 decimal places

% enter a percentage number rounded to 2 decimal places

% enter a percentage number rounded to 2 decimal places

%

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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 select a rank of the project select a rank of the project select a rank of the project

Edge select a rank of the project select a rank of the project select a rank of the project

Clayton select a rank of the project select a rank of the project select a rank of the project

The best project is select the best project.

.

Question 6 --/1 View Policies Current Attempt in Progress 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 Project Edge Project Clayton Capital investment $164,800 $180,250 $206,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,5 10 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash ows occur evenly throughout the year.) Click here to view PV table