M 1 E26.2 Compute.cash payback period and not present value 2 Doug's Custom Construction Company is considering three new projects, each requiring an equipment 3 Investment of $22,000. Each project will last for 3 years and produce the following net annual cash 4 flows. Year AA BB 7 1 $7,000 $10,000 $13,000 8 2 9,000 10,000 12.000 9 3 12.000 10,000 11,000 10 Total $28,000 $30,000 $36,000 11 12 The equipment's salvage value is zero, and Doug uses straight-line depreciation Doug will not 13 accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%. 14 15 Instructions 26 (a) Compute each project's payback period, indicating the most desirable project and the least desirable project using this method. (Round to two decimals and assume in your computations that cash flows occur evenly throughout the year.) 19 (6) Compute the not present value of each project. Does your evaluation change? (Round to nearest dollar) 21 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". 17 18 20 22