Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,760. Each project will last for 3 years and produce the following net annual cash flows. Year 1 2 3 (a) AA AA 9,720 BB BB $7,560 $10,800 $14,040 12,960 10,800 CC 10,800 Total $30,240 $32,400 $38,880 12,960 The equipment's salvage value is zero, and Sunland uses straight-line depreciation. Sunland will not accept any project with a cash payback period over 2 years. Sunland's required rate of return is 12%. Click here to view the factor table. 11,880 4 Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.) years years

Transcribed Image Text:

Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,760. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $7,560 $10,800 $14,040 2 9,720 10,800 12,960 3 12,960 10,800 11,880 Total $30,240 $32,400 $38,880 The equipment's salvage value is zero, and Sunland uses straight-line depreciation. Sunland will not accept any project with a cash payback period over 2 years. Sunland's required rate of return is 12%. Click here to view the factor table. (a) Compute each project's payback period. (Round answers to 2 decimal places, eg. 15.25.) AA BB years years Sunland's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,760. Each project will last for 3 years and produce the following net annual cash flows. Year AA BB CC 1 $7,560 $10,800 $14,040 2 9,720 10,800 12,960 3 12,960 10,800 11,880 Total $30,240 $32,400 $38,880 The equipment's salvage value is zero, and Sunland uses straight-line depreciation. Sunland will not accept any project with a cash payback period over 2 years. Sunland's required rate of return is 12%. Click here to view the factor table. (a) Compute each project's payback period. (Round answers to 2 decimal places, eg. 15.25.) AA BB years years