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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Henkel 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 Kilo | Project Lima | Project Oscar | ||||||
| Capital investment | $168,950 | $179,850 | $202,800 | |||||
| Annual net income: | ||||||||
| Year | 1 | 14,170 | 19,075 | 29,975 | ||||
| 2 | 14,170 | 17,985 | 24,525 | |||||
| 3 | 14,170 | 16,895 | 23,435 | |||||
| 4 | 14,170 | 12,535 | 14,715 | |||||
| 5 | 14,170 | 9,265 | 13,625 | |||||
| Total | $70,850 | $75,755 | $106,275 | |||||
Depreciation is computed by the straight-line method with no salvage value. The companyA????1s cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.)
A) Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
| Project Kilo___ | years |
||
| Project Lima___ | years |
||
| Project Oscar___ | years |
|
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