Calculation of payback period | ||||
depreciation = 168000/5 = 33600 | ||||
project bono | ||||
payback period = capital investment/cash inflow | ||||
payback period = 168000/(14700+33600) = 3.48 years | ||||
Project Edge | ||||
depreciation = 183750/5 = 36750 | ||||
Years | annual net income (a) | depreciation(b) | cash flow(a)+(b) | cumulative cash flow |
1 | 18900 | 36750 | 55650 | 55650 |
2 | 17850 | 36750 | 54600 | 110250 |
3 | 16800 | 36750 | 53550 | 163800 |
4 | 12600 | 36750 | 49350 | 213150 |
5 | 9450 | 36750 | 46200 | 259350 |
payback period = (183750-163800)/(213150-163800) = 0.40 | ||||
payback period = 3+0.40 = 3.40years | ||||
project Clayton | ||||
depreciation = 202000/5 = 40400 | ||||
Years | annual net income (a) | depreciation(b) | cash flow(a)+(b) | cumulative cash flow |
1 | 28350 | 40400 | 68750 | 68750 |
2 | 24150 | 40400 | 64550 | 133300 |
3 | 22050 | 40400 | 62450 | 195750 |
4 | 13650 | 40400 | 54050 | 249800 |
5 | 12600 | 40400 | 53000 | 302800 |
payback period = (202000-195750)/(249800-195750) = 0.12 | ||||
payback period = 3years+0.12 = 3.12 years | ||||
Net present value | ||||
project bono | ||||
year | cash inflow | pvf@15% | present value | |
1 | 48300 | 0.86957 | 42000 | |
2 | 48300 | 0.75614 | 36521.562 | |
3 | 48300 | 0.65752 | 31758.216 | |
4 | 48300 | 0.57175 | 27615.525 | |
5 | 48300 | 0.49718 | 24013.794 | |
total | 161909.097 | |||
investment | -168000 | |||
net present value | -6090.903 | |||
Project Edge | ||||
year | cash inflow | pvf@15% | present value | |
1 | 55650 | 0.86957 | 48391.30 | |
2 | 54600 | 0.75614 | 41285.24 | |
3 | 53550 | 0.65752 | 35210.20 | |
4 | 49350 | 0.57175 | 28215.86 | |
5 | 46200 | 0.49718 | 22969.72 | |
total | 176072.32 | |||
investment | -183750 | |||
net present value | -7677.68 | |||
project Clayton | ||||
year | cash inflow | pvf@15% | present value | |
1 | 68750 | 0.86957 | 59782.61 | |
2 | 64550 | 0.75614 | 48808.84 | |
3 | 62450 | 0.65752 | 41062.12 | |
4 | 54050 | 0.57175 | 30903.09 | |
5 | 53000 | 0.49718 | 26350.54 | |
total | 206907.20 | |||
investment | -202000 | |||
net present value | 4907.20 | |||
Annual rate of return | ||||
project bono = 14700/(168000/2) = 17.5% | ||||
project edge = (75600/5)/(183750/2) = 16.46% | ||||
project clayton = (100800/5)/(202000/2) = 19.96% | ||||
Rank | ||||
project | cash payback | net present value | annual rate of return | |
Bono | 3 | 2 | 2 | |
Edge | 2 | 3 | 3 | |
Clayton | 1 | 1 | 1 | |
the best project is Clayton |
Question 1 --/1 View Policies Current Attempt in Progress U3 Company is considering three long-term capital...
Question 4 /20 View Policies Current Attempt in Progress 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 $168,000 $183,750 $202,000 Capital investment Annual net income Year 1 14,700 18,900 28,350 2. 14,700 17,850 24,150 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...
Question 15 0.49/1 View Policies Show Attempt History Current Attempt in Progress 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 14,700 17.850 24.150 14.700 16.800 22.050 + 14,700 12,600 13.650 14,700 9,450 12,600 Total $73,500 $75,600 $100.800 Depreciation is computed by the...
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 $210,000 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...
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 $164,800 $180,250 $202.000 Annual net income: Year 1 14.420 18,540 27,810 14,420 17,510 23,690 14,420 16,480 21,630 14,420 + 13,390 12,360 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%....
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 $ 161,600 $176,750 $204,000 Annual net income: Year 1 14,140 18,180 27,270 14,140 17,170 23,230 14,140 16,160 21,210 14,140 12,120 13,130 14,140 9,090 12,120 Total $70,700 $72,720 $96,960 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%....
need an answer for part c
Support 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 $164,800 Project Edge $180,250 Project Clayton $204,000 Capital investment Annual net income: Year 1 14,420 18,540 27.810 14420 17.510 23.690 14,420 16,480 21,630 14,420 12.360 13,390 14420 9.270 12.360 $72.100 $74,160 S98 880 ✓ Your answer is correct. Compute the cash payback period for each...
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
$161,600
$176,750
$204,000
Annual net income:
Year 1
14,140
18,180
27,270
2
14,140
17,170
23,230
3
14,140
16,160
21,210
4
14,140
12,120
13,130
5
14,140
9,090
12,120
Total
$70,700
$72,720
$96,960
Depreciation is computed by the straight-line method with no
salvage value. The company’s cost of capital...
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 $163,200 Project Edge $178,500 Project Clayton $204,000 Capital investment Annual net income: Year 14,280 14,280 14,280 14,280 14,280 $71,400 18,360 17,340 16,320 12,240 9,180 $73,440 27,540 23,460 21,420 13,260 12,240 $97,920 Total Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that...
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 $164,800 $180,250 $204,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company’s cost of capital...
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 $164,800 $180,250 $206,000 Annual net income: Year 1 14,420 18,540 27,810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 4 14,420 12,360 13,390 5 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company’s cost of capital...