Carla Vista 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 $165,000 $183,000 $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 company’s cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view the factor table. (a) Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono enter a number of years rounded to 2 decimal places years Project Edge enter a number of years rounded to 2 decimal places years Project Clayton enter a number of years rounded to 2 decimal places
Carla Vista 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 $165,000 $183,000 $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 company’s cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view the factor table. (a) Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono enter a number of years rounded to 2 decimal places years Project Edge enter a number of years rounded to 2 decimal places years Project Clayton enter a number of years rounded to 2 decimal places
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 4CMA
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Carla Vista 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.
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.
Project Bono
|
Project Edge
|
Project Clayton
|
|||||
---|---|---|---|---|---|---|---|
Capital investment
|
$165,000 | $183,000 | $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 |
Click here to view the factor table.
(a)
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
Project Bono
|
enter a number of years rounded to 2 decimal places
|
years | |
---|---|---|---|
Project Edge
|
enter a number of years rounded to 2 decimal places
|
years | |
Project Clayton
|
enter a number of years rounded to 2 decimal places
|
years |
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Follow-up Question
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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