Suzaki Manufacturing Company is considering three new projects, each requiring an equipment investment of $22,000. Each project will last for 3 years and produce the following cash inflows.
Year AA BB CC
1 $ 7,000 $ 9,500 $13,000
2 9,000 9,500 10,000
3 15,000
9,500
9,000
Total $31,000
$28,500
$32,000
The equipment's salvage value is zero. Suzaki uses straight-line depreciation. Suzaki will not accept any project with a payback period over 2 years. Suzaki's minimum required rate of return is 12%.