Carla Vista's Custom Construction Company is considering three new projects, each requiring an equipment investment of...
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Carla Vista's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,980. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB 1 $7.630 $10,900 2 9,810 10,900 3 13,000 10,900 Total $30,520 $32,700 cc $14,170 13,080 11,990 $39,240 The equipment's salvage value is zero, and Carla Vista uses straight-line depreciation. Carla Vista will not accept any project with a cash payback period over 2 years. Caria Vista'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, eg. 15.25) (b) Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Carla Vista's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,980. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB 1 $7.630 $10,900 2 9,810 10,900 3 13,000 10,900 Total $30,520 $32,700 cc $14,170 13,080 11,990 $39,240 The equipment's salvage value is zero, and Carla Vista uses straight-line depreciation. Carla Vista will not accept any project with a cash payback period over 2 years. Caria Vista'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, eg. 15.25) (b) Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
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a Payback Period payback period initial investmentnet cash flow Project AA 239807630 The payback p... View the full answer
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Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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