Waterways Custom Construction Company is considering three new projects, each requiring an equipment investment of...
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Accounting
Waterways Custom Construction Company is considering three new projects, each requiring an equipment investment of $27,500. Each project will last for 3 years and produce the following net annual cash flows.
Year
AA
BB
CC
1
$8,750
$12,500
$16,250
2
11,250
12,500
15,000
3
15,000
12,500
13,750
Total
$35,000
$37,500
$45,000
The equipments salvage value is zero, and Waterway uses straight-line depreciation. Waterway will not accept any project with a cash payback period over 2 years. Waterways required rate of return is 12%. Click here to view PV table. (a) Compute each projects payback period. (Round answers to 2 decimal places, e.g. 15.25.)
AA
enter your answer rounded to 2 decimal places
years
BB
enter your answer rounded to 2 decimal places
years
CC
enter your answer rounded to 2 decimal places
years
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