Waterways Custom Construction Company is considering three new projects, each requiring an equipment investment of...
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Accounting
Waterways Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,500. Each project will last for 3 years and produce the following net annual cash flows.
| Year | AA | BB | CC | ||||
|---|---|---|---|---|---|---|---|
| 1 | $8,750 | $12,500 | $16,250 | ||||
| 2 | 11,250 | 12,500 | 15,000 | ||||
| 3 | 15,000 | 12,500 | 13,750 | ||||
| Total | $35,000 | $37,500 | $45,000 |
The equipments salvage value is zero, and Waterway uses straight-line depreciation. Waterway will not accept any project with a cash payback period over 2 years. Waterways required rate of return is 12%. Click here to view PV table. (a) Compute each projects payback period. (Round answers to 2 decimal places, e.g. 15.25.)
| AA | enter your answer rounded to 2 decimal places | years | |
|---|---|---|---|
| BB | enter your answer rounded to 2 decimal places | years | |
| CC | enter your answer rounded to 2 decimal places | years |
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