The Stenny and Homer partnership is considering three long-term capital investment proposals. Each investment has...
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Accounting
The Stenny and Homer partnership is considering three longterm capital investment proposals. Each investment has a useful life of years. Relevant data on each project are as follows.
Capital investment
Project Fix $
Project Marl
Project Crank
$
$
Annual net income:
Year
$
$
$
Total
$
$
$
Depreciation is computed by the straightline method with no salvage value. The company's cost
of capital is Assume cash flows occur evenly throughout the year.
Instructions
a Compute the net present value for each project.
b Compute the annual rate of return for each project.
Answer & Explanation
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