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		$ 204,000
Annual net income:
Year 1		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 companys cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Make sure to view the PV table for this.

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		$ _________		$ __________		$ _____________

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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		_________ %		__________ %		_______________ %

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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 1 3 2		select a rank of the project select a rank of the project 2 3 1		select a rank of the project select a rank of the project 3 2 1
Edge		select a rank of the project select a rank of the project 1 3 2		select a rank of the project select a rank of the project 1 2 3		select a rank of the project select a rank of the project 1 2 3
Clayton		select a rank of the project select a rank of the project 1 3 2		select a rank of the project select a rank of the project 1 2 3		select a rank of the project select a rank of the project 1 2 3

The best project is select the best project select the best project Edge,Clayton, or Bono?