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    ajenkins's Avatar
    ajenkins Posts: 2, Reputation: 1
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    #1

    May 24, 2010, 11:40 AM
    The Three Stooges partnership is considering three long-term capital investment propo
    The Three Stooges partnership 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 Moe Project Larry Project Curly
    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 decimal places, e.g. 10.50.)
    Project Moe years
    Project Larry years
    Project Curly years









    Compute the net present value for each project. (Round computations for 15% Discount Factor to 5 decimal places. Round answers to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
    Project Moe $
    Project Larry $
    Project Curly $









    Compute the annual rate of return for each project. (Round answers to 2 decimal places, e.g. 10.50. Hint: Use average annual net income in your computation.)
    Project Moe %
    Project Larry %
    Project Curly %









    Rank the projects on each of the foregoing bases. Which project do you recommend?
    LarryCurlyMoe
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    May 26, 2010, 03:15 AM

    Please see the guidelines for posting homework problems:
    https://www.askmehelpdesk.com/arts-l...-b-u-font.html

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