Sandhill 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. Capital investment Annual net income: Year 1 2 3 4 5 Total Project Bono $163,000 14,700 14,700 14,700 14,700 14,700 $73,500 Annual rate of return Save for Later Project Edge Project Clayton $180,000 $202,000 18,900 17,850 16,800 eTextbook and Media 12,600 9,450 $75,600 Depreciation 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) 28,350 24,150 22,050 13,650 Depreciation is computed by the straight-line method with no salvage value. The company's cos flows occur evenly throughout the year.) (b) Project Bono 12,600 $100,800 % Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Edge Project Bono Project Edge Project Clayton eTextbook and Media Your answer is correct. Net present value 3.45 3.38 3.12 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 Clayton Project Bono Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed the factor table provided.) years -4443 % years years Attempts: 0 of 5 used Submit Answer Project Edge Attempts: 1 of 5 -6442 Project Clayton 4908
Sandhill 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. Capital investment Annual net income: Year 1 2 3 4 5 Total Project Bono $163,000 14,700 14,700 14,700 14,700 14,700 $73,500 Annual rate of return Save for Later Project Edge Project Clayton $180,000 $202,000 18,900 17,850 16,800 eTextbook and Media 12,600 9,450 $75,600 Depreciation 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) 28,350 24,150 22,050 13,650 Depreciation is computed by the straight-line method with no salvage value. The company's cos flows occur evenly throughout the year.) (b) Project Bono 12,600 $100,800 % Your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Edge Project Bono Project Edge Project Clayton eTextbook and Media Your answer is correct. Net present value 3.45 3.38 3.12 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 Clayton Project Bono Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed the factor table provided.) years -4443 % years years Attempts: 0 of 5 used Submit Answer Project Edge Attempts: 1 of 5 -6442 Project Clayton 4908
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Sandhill 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.
Capital investment
Annual net income:
Year 1
2
3
4
5
Total
Project Bono
$163,000
14,700
14,700
14,700
14,700
14,700
$73,500
Annual rate of return
Project Edge Project Clayton
$180,000
$202,000
Save for Later
18,900
17,850
16,800
12,600
9,450
$75,600
eTextbook and Media
Depreciation 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)
28,350
24,150
22,050
13,650
Project Bono
12,600
$100,800
Depreciation is computed by the straight-line method with no salvage value. The company's cos
flows occur evenly throughout the year.)
(b)
%
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
Project Edge
Your answer is correct.
Project Bono
Project Edge
Project Clayton
eTextbook and Media
Your answer is correct.
Net present value $
%
3.45
3.38
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%)
3.12
Project Clayton
Project Bono
Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, use
either a negative sign preceding the number eg-45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in
the factor table provided.)
years
-4443
%
years
years
Attempts: 0 of 5 used Submit Answer
Project Edge
Attempts: 1 of 5 us
-6442
Project Clayton
4908
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