Cullumber 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 Bono
Project Edge
Project Clayton
Capital investment
$171,200
$187,250
$208,000
Annual net income:
Year 1
14,980
19,260
28,890
2
14,980
18,190
24,610
3
14,980
17,120
22,470
4
14,980
12,840
13,910
5
14,980
9,630
12,840
Total
$74,900
$77,040
$102,720
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.)
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Compute cash payback period dor each project
project Bono____ years
project Edge _____ years
Project clayton ____ years