Flounder Manufacturing Company is considering three new projects, each requiring an equipment investment of $23,800. Eachproject will last for 3 years and produce the following cash flows.Year123Total(a)AABB$7,600 $10,300 $11,60010,30010,60010,3009,60015,600$32,800Click here to view PV tables.The salvage value for each of the projects is zero. Flounder uses straight-line depreciation. Flounder will not accept any project with apayback period over 2.2 years. Flounder's minimum required rate of return is 12%.Paybackperiod(b)Your answer is correct.Compute each project's payback period. (Round answers to 2 decimal places, e.g. 52.75.)Most desirable$30,900 $31,800Least desirableCCIndicating the most desirable project and the least desirable project using this method.Project CCeTextbook and Media9,600Project AAMost desirableNet present value $Least desirableAA2.42 yearsAABBCompute the net present value of each project. (Use the above table.) (Round factor values to 5 decimal places, e.g. 1.25124 and finalanswers to O decimal places, e.g. 5,275.)$2.31 yearsBBIndicating the most desirable project and the least desirable project using this method.$CCCC2.17 yearsAttempts: 1 of 5 used

Definition of Payback PeriodThe payback period is the time it takes for a project to recover its…

Answered: Compute the net present value of each…

Business

Accounting

Compute the net present value of each proje

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 19P

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