?Chapter 24 Homework xy rel WileyPLUS x C Chegg Study | Guided So x C Chegg Stud

Question

?Chapter 24 Homework xy rel WileyPLUS x C Chegg Study | Guided So x C Chegg Study | Guided So x CSecure https//edugen.wileyplus.c uni WileyPLUS: Kimmel, Accounting, 6e TER VERSION ASSIGNMENT RESOURCES Problem 24-1 Chapter 24 Homework U3 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. Assignment E Exercise 24-1 D Exercise 24-2 a Exercise 24-4 Project Bono $164,800 Project Edge $130,250 Project Clayton $204,000 Capital investment Annual net income Year 1 ?Exercise 24-8 14,420 14,420 14,420 14,420 14,420 572,100 8,540 17,510 16,430 12,360 9,270 574,160 27,510 23,690 21,630 13,390 12,360 99,830 Review Score Total Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assumo that cash flows occur overly throughout the year.? [your answer is correct. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.so.) Project Bono Project Edge Project Clayton 3.47 years 3.40 years 3.15 year SHOW SOLUTION LINK TO TEXTLINK TO TEXT LINK TO TEXT Your answer is correct. 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 elther 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 Clayton ??agt. 10:30 AM 7/16/2018 O Type here to search

Explanation / Answer

Project Bono:

Average Investment = (Capital Investment + Residual Value) / 2
Average Investment = ($164,800 + $0) / 2
Average Investment = $82,400

Average Net Income = Total Net Income / Period of Project
Average Net Income = $72,100 / 5
Average Net Income = $14,420

Annual Rate of Return = Average Net Income / Average Investment
Annual Rate of Return = $14,420 / $82,400
Annual Rate of Return = 17.50%

Project Edge:

Average Investment = (Capital Investment + Residual Value) / 2
Average Investment = ($180,250 + $0) / 2
Average Investment = $90,125

Average Net Income = Total Net Income / Period of Project
Average Net Income = $74,160 / 5
Average Net Income = $14,832

Annual Rate of Return = Average Net Income / Average Investment
Annual Rate of Return = $14,832 / $90,125
Annual Rate of Return = 16.46%

Project Clayton:

Average Investment = (Capital Investment + Residual Value) / 2
Average Investment = ($204,000 + $0) / 2
Average Investment = $102,000

Average Net Income = Total Net Income / Period of Project
Average Net Income = $98,880 / 5
Average Net Income = $19,776

Annual Rate of Return = Average Net Income / Average Investment
Annual Rate of Return = $19,776 / $102,000
Annual Rate of Return = 19.39%

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