Buford Manufacturing Company is considering three new projects, each requiring an equipment investment of $22,000. Each project will last for 3 years and produce the following cash inflows.

The equipment€™s salvage value is zero. Buford uses straight-line depreciation. Buford will not accept any project with a payback period over 2 years. Buford€™s minimum required rate of return is 12%.

Instructions
(a) Compute each project€™s payback period, indicating the most desirable project and the least desirable project using this method. (Round to two decimals.)
(b) Compute the net present value of each project. Does your evaluation change? (Round to nearestdollar.)

Year $13,000 10,000 9,000 Total 31000 28,500$32,000 7,000 9,000 15,000 9,500 9,500 9,500