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		$176,000		$192,500		$212,000
Annual net income:
Year 1		15,400		19,800		29,700
2		15,400		18,700		25,300
3		15,400		17,600		23,100
4		15,400		13,200		14,300
5		15,400		9,900		13,200
Total		$77,000		$79,200		$105,600

Depreciation is computed by the straight-line method with no salvage value. The companys cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table.

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Your answer is correct.

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 132		select a rank of the project 231		select a rank of the project 321
Edge		select a rank of the project 132		select a rank of the project 123		select a rank of the project 123
Clayton		select a rank of the project 132		select a rank of the project 123		select a rank of the project 123

The best project is select the best project BonoEdgeClayton.