Compute the cash payback period for each project round

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The Three Stooges partnership is considering three long-termcapital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows.



ProjectMoe ProjectLarry ProjectCurly
Capital investment $150,000 $160,000 $200,000
Annual net income:


    Year 1 13,000 18,000 27,000
2 13,000 17,000 22,000

3 13,000 16,000 21,000

4 13,000 12,000 13,000

5

13,000

9,000

12,000

Total

$65,000

$72,000

$95,000

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.)

Compute the cash payback period for each project. (Round answers to 2 decimalplaces, e.g. 10.50.)

Compute the net present value for each project.

Compute the annual rate of return for each project.

Reference no: EM13481759

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