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	$160,000	$175,000	$200,000
Annual net income:
Year 1	14,000	18,000	27,000
2	14,000	17,000	23,000
3	14,000	16,000	21,000
4	14,000	12,000	13,000
5	14,000	9,000	12,000
Total	$70,000	$72,000	$96,000

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.)

Compute the cash payback period for each project.

Project Bono: 3.48 years Project Edge: 3.40 years Project Clayton: 3.17 years

Compute the net present value for each project.

	Project Bono	Project Edge	Project Clayton
Net Present value	$ (5801)	$ (7312)	$ 2163

Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) Round answer to 2 decimal places.

	Project Bono	Project Edge	Project Clayton
Annual rate of return	???? % (answer is not 8.75)	????? % (answer is not 8.23)	????? % (answer is not 9.60)