Compute each projects payback period

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Reference no: EM131208389

Doug’s Custom Construction Company is considering three new projects, each requiring an equipment investment of $22,230. Each project will last for 3 years and produce the following net annual cash flows.

1 $9,477 12,344 $15,327

2 12,168 12,344 11,817

3 17,667 12,344 12,987

Total $ 39,312 $37,032 $40,131

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

Compute each project’s payback period

Reference no: EM131208389

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