Doug S Custom Construction Company Is Considering Three New Projects Each Requiring An Equipment Investment Of 24 860 1 (28.38 KiB) Viewed 48 times
Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $24.860. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB сс 1 $7.910 $11,300 $14.690 2 Unresolved 11,300 13.560 3 13,560 11,300 12,430 Total $31,640 $33.900 $40,680 The equipment's salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%. Click here to view PV table. (a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) AA years BB years CC years Which is the most desirable project? The most desirable project based on payback period is Which is the least desirable project? The least desirable project based on payback period is
(b) Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round final answers to the nearest whole dollar, eg. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) AA BB CC Which is the most desirable project based on net present value? The most desirable project based on net present value is Which is the least desirable project based on net present value? The least desirable project based on net present value is <
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!