Question: Oriole's Custom Construction Company is considering three new projects, each requiring an equipment investment of $25,520. Each project will last for 3 years and produce

Oriole's Custom Construction Company is considering three new projects, each requiring an equipment investment of $25,520. Each project will last for 3 years and produce the following net annual cash flows.

Year AA BB CC
1 $8,120 $11,600 $15,080
2 10,440 11,600 13,920
3 13,920 11,600 12,760
Total $32,480 $34,800 $41,760

The equipment's salvage value is zero, and Oriole uses straight-line depreciation. Oriole will not accept any project with a cash payback period over 2 years. Oriole's required rate of return is 12%.

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