Question 7 of 7 074 Pharoah Company is considering three long-term capital investment proposals. Each investment has a u

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: Question 7 Of 7 074 Pharoah Company Is Considering Three Long Term Capital Investment Proposals Each Investment Has A U 1 (32.67 KiB) Viewed 97 times

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Question 7 of 7 074 Pharoah 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 Capital investment $172.000 Project Clayton $202,000 $182,000 Annual net income: Year 1 14.700 18,900 28,350 2 14.700 17,850 24,150 3 14.700 16,800 22,050 4 14,700 12,600 13,650 5 14,700 9,450 12,600 Total $73,500 $75,600 $100,800 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.
Question 7 of 7 < > (a) Your Answer Correct Answer X Your answer is incorrect. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono 11.70 years Project Edge 12.04 years Project Clayton 10.02 years e Textbook and Media Solution Assistar Project Bono $172,000 + ($14.700 + $ 34,400) = 3.50 years Proiect Edge
Question 7 of 7 Solution Project Bono $172,000 = ($14.700 + $34,400) = 3.50 years Project Edge Year Cash Flow Cumulative Cash Flow 1 $55,300 ($18,900 + $36,400) $55,300 2 $109,550 3 $54,250 ($17,850 + $36,400) $53,200 ($16,800 + $36,400) $49,000 ($12,600 + $36,400) $162,750 4 $211,750 5 $45,850 ($9.450 + $ 36,400) $257,600 Cash payback period 3.39 years $182,000 - $162.750 - $19,250 $19.250 + $49.000 = 0.39 Project Clayton Year Cumulative Cash Flow Cash Flow 1 $68,750 ($28,350+ $40,400) $68,750 2 $64,550 ($24.150+ $40,400) $133,300
Question 7 of 7 4 $49,000 ($12,600+ $36,400) $211,750 5 $45,850 ($9.450 + $36,400) $257,600 Cash payback period 3.39 years $182,000 - $162,750 = $19,250 $19,250 - $49,000 = 0.39 Project Clayton Cumulative Cash Flow Year Cash Flow 1 $68,750 ($28,350 + $40,400) $68,750 2 $64,550 ($24.150 + $40,400) $133,300 3 $62,450 ($22,050 + $ 40,400) $195,750 $54,050 ($13,650 + $40,400) $249,800 5 $53,000 ($12,600+ $40,400) $302,800 Cash payback period 3.12 years $202,000 - $195,750 = $6,250 $6,250 - $54,050 = 0.12
(b) Compute the net present value for each project. (Round answers to decimal places, es. 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 $ e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (c) The parts of this question must be completed in order. This part will be available when you complete the part above. (d) The parts of this question must be completed in order. This part will be available when you complete the part above.