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Sandhill 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. Capital investment Annual net income: Year 1 2 3 4 5 Total Project Bono $163,000 14,700 14,700 14,700 14,700 14,700 $73,500 Annual rate of return Save for Later Project Edge Project Clayton $180,000 $202,000 18,900 17,850 16,800 eTextbook and Media 12,600 9,450 $75,600 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) 28,350 24,150 22,050 13,650 Depreciation is computed by the straight-line method with no salvage value. The company's cos flows occur evenly throughout the year.) (b) Project Bono 12,600 $100,800 % Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Edge Project Bono Project Edge Project Clayton eTextbook and Media Your answer is correct. Net present value 3.45 3.38 3.12 Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%) Project Clayton Project Bono Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed the factor table provided.) years -4443 % years years Attempts: 0 of 5 used Submit Answer Project Edge Attempts: 1 of 5 -6442 Project Clayton 4908

Sandhill 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. Capital investment Annual net income: Year 1 2 3 4 5 Total Project Bono $163,000 14,700 14,700 14,700 14,700 14,700 $73,500 Annual rate of return Save for Later Project Edge Project Clayton $180,000 $202,000 18,900 17,850 16,800 eTextbook and Media 12,600 9,450 $75,600 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) 28,350 24,150 22,050 13,650 Depreciation is computed by the straight-line method with no salvage value. The company's cos flows occur evenly throughout the year.) (b) Project Bono 12,600 $100,800 % Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Edge Project Bono Project Edge Project Clayton eTextbook and Media Your answer is correct. Net present value 3.45 3.38 3.12 Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%) Project Clayton Project Bono Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed the factor table provided.) years -4443 % years years Attempts: 0 of 5 used Submit Answer Project Edge Attempts: 1 of 5 -6442 Project Clayton 4908

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 15P
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Sandhill 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. Capital investment Annual net income: Year 1 2 3 4 5 Total Project Bono $163,000 14,700 14,700 14,700 14,700 14,700 $73,500 Annual rate of return Project Edge Project Clayton $180,000 $202,000 Save for Later 18,900 17,850 16,800 12,600 9,450 $75,600 eTextbook and Media 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) 28,350 24,150 22,050 13,650 Project Bono 12,600 $100,800 Depreciation is computed by the straight-line method with no salvage value. The company's cos flows occur evenly throughout the year.) (b) % Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Edge Your answer is correct. Project Bono Project Edge Project Clayton eTextbook and Media Your answer is correct. Net present value $ % 3.45 3.38 Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%) 3.12 Project Clayton Project Bono Compute the net present value for each project. (Round answers to O 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.) years -4443 % years years Attempts: 0 of 5 used Submit Answer Project Edge Attempts: 1 of 5 us -6442 Project Clayton 4908
Transcribed Image Text:Sandhill 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. Capital investment Annual net income: Year 1 2 3 4 5 Total Project Bono $163,000 14,700 14,700 14,700 14,700 14,700 $73,500 Annual rate of return Project Edge Project Clayton $180,000 $202,000 Save for Later 18,900 17,850 16,800 12,600 9,450 $75,600 eTextbook and Media 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) 28,350 24,150 22,050 13,650 Project Bono 12,600 $100,800 Depreciation is computed by the straight-line method with no salvage value. The company's cos flows occur evenly throughout the year.) (b) % Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Edge Your answer is correct. Project Bono Project Edge Project Clayton eTextbook and Media Your answer is correct. Net present value $ % 3.45 3.38 Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%) 3.12 Project Clayton Project Bono Compute the net present value for each project. (Round answers to O 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.) years -4443 % years years Attempts: 0 of 5 used Submit Answer Project Edge Attempts: 1 of 5 us -6442 Project Clayton 4908
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