Sheffield Company is considering three long-term capital investment proposals. Each investment has a useful life of...
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Sheffield Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono $164,800 Capital investment Annual net income: Year 1 2 3 4 5 Total 14,420 14,420 14,420 14,420 14,420 $72,100 years Project Edge Project Clayton $180,250 $204,000 Depredation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view Py table years 18,540 17,510 16,480 12,360 9,270 $74,160 Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono. Project Edge Project Clayton years 27,810 23,690 21,630 13,390 12,360 $99,880 Net present value Project Bono Project Edge Project Clayton Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50.) Project Bono Project Edge Project Clayton $ Annual rate of return. Rank the projects on each of the foregoing bases. Which project do you recommend? Edge Net Annual Project Cash Payback Present Value Rate of Return Bono Clayton The best project is Sheffield Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono $164,800 Capital investment Annual net income: Year 1 2 3 4 5 Total 14,420 14,420 14,420 14,420 14,420 $72,100 years Project Edge Project Clayton $180,250 $204,000 Depredation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view Py table years 18,540 17,510 16,480 12,360 9,270 $74,160 Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono. Project Edge Project Clayton years 27,810 23,690 21,630 13,390 12,360 $99,880 Net present value Project Bono Project Edge Project Clayton Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50.) Project Bono Project Edge Project Clayton $ Annual rate of return. Rank the projects on each of the foregoing bases. Which project do you recommend? Edge Net Annual Project Cash Payback Present Value Rate of Return Bono Clayton The best project is
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a Capital Investment Annual net income Year 1 Year 2 Year 3 Year 4 Year 5 Total Average net income D... View the full answer
Related Book For
Accounting Principles
ISBN: 978-1118875056
12th edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
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