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Business, 12.12.2019 06:31 johnlumpkin5183

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 $168,000 $183,750 $202,000 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.)

1- compute the cash payback period for each project: bono, edge, clayto
2- compute the net present value for each project.
3- compute the annual rate of return for each project.
4- rank the projects on each of the foregoing bases. which project do you recommend?

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