Henkel 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 Kilo |
|
Project Lima |
Project Oscar |
|
| Capital investment |
|
|
$158,100 |
|
$168,300 |
|
$198,900 |
|
| Annual net income: |
|
|
|
|
|
|
|
| Year |
1 |
|
13,260 |
|
17,850 |
|
28,050 |
|
|
2 |
|
13,260 |
|
16,830 |
|
22,950 |
|
|
3 |
|
13,260 |
|
15,810 |
|
21,930 |
|
|
4 |
|
13,260 |
|
11,730 |
|
13,770 |
|
|
5 |
|
13,260 |
|
8,670 |
|
12,750 |
|
| Total |
|
$66,300 |
|
$70,890 |
|
$99,450 |
|
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.) (Refer the below table)
Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.)
kilo years
LIma years
Oscar Years
Compute the net present value for each project. (Round computations and final answer for present value to 0 decimal places, e.g. 125. Round computations for Discount Factor to 5 decimal places. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
Kilo $
Lima $
Oscar $
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.)
Kilo %
Lima %
Oscar %