Solution-Compute each project payback period

Compute each project payback period

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Reference no: EM132768130

Question - Bridgeport's Custom Construction Company is considering three new projects, each requiring an equipment investment of $22,880. Each project will last for 3 years and produce the following net annual cash flows.

Year	AA	BB	CC
1	7280	10400	13520
2	9360	10400	12480
3	12480	10400	11440
Total	29120	31200	37440

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

Required -

(a) Compute each project's payback period.

(b) Which is the most desirable project?

Reference no: EM132768130

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Compute each project payback period

Reference no: EM132768130

Reference no: EM132768130

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