Crane 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 Project Edge Project Clayton Capital investment $164,000 $180,500 $204,000 Annual net income: Year 1 14,420 18,540 27,810 14,420 17,510 23,690 14,420 16,480 21,630 4 14,420 12,360 13,390 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 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.) Click here to view the factor table. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years
Crane 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 Project Edge Project Clayton Capital investment $164,000 $180,500 $204,000 Annual net income: Year 1 14,420 18,540 27,810 14,420 17,510 23,690 14,420 16,480 21,630 4 14,420 12,360 13,390 14,420 9,270 12,360 Total $72,100 $74,160 $98,880 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.) Click here to view the factor table. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 11P
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![Crane 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
Project Edge Project Clayton
Capital investment
$164,000
$180,500
$204,000
Annual net income:
Year 1
14,420
18,540
27,810
2
14,420
17,510
23,690
14,420
16,480
21,630
4
14,420
12,360
13,390
14,420
9,270
12,360
Total
$72,100
$74,160
$98,880
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.)
Click here to view the factor table.
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
Project Bono
years
Project Edge
years
Project Clayton
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3aff2365-9f44-4770-b8e3-e2ed0988bbf7%2F697537a1-7beb-4d14-ad99-69d62ef29760%2F5w3iwge_processed.png&w=3840&q=75)
Transcribed Image Text:Crane 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
Project Edge Project Clayton
Capital investment
$164,000
$180,500
$204,000
Annual net income:
Year 1
14,420
18,540
27,810
2
14,420
17,510
23,690
14,420
16,480
21,630
4
14,420
12,360
13,390
14,420
9,270
12,360
Total
$72,100
$74,160
$98,880
Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%.
(Assume that cash flows occur evenly throughout the year.)
Click here to view the factor table.
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
Project Bono
years
Project Edge
years
Project Clayton
years
![Compute the net present value for each project. (Round answers to 0 decimal places, e.g. 125. If the net
present value is negative, use either a negative sign preceding the number eg -45 or parentheses
eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Project Bono
Project Edge
Project
Net present value
2$
$
2$
eTextbook and Media
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
Pro
Annual rate of return
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3aff2365-9f44-4770-b8e3-e2ed0988bbf7%2F697537a1-7beb-4d14-ad99-69d62ef29760%2Fcmx969o_processed.png&w=3840&q=75)
Transcribed Image Text:Compute the net present value for each project. (Round answers to 0 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.)
Project Bono
Project Edge
Project
Net present value
2$
$
2$
eTextbook and Media
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
Pro
Annual rate of return
%
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Follow-up Question
![(b)
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.)
Net present value
Save for Later
$
Project Bono
$
Project Edge
$
Project Clayton
Attempts: 0 of 4 used
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Transcribed Image Text:(b)
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.)
Net present value
Save for Later
$
Project Bono
$
Project Edge
$
Project Clayton
Attempts: 0 of 4 used
Submit Answer
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