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Sanchez Corporation is considering three long-term capital investment proposals. Relevant data on each project are as follows.;Project;Brown;Red;YellowCapital investment $188,930 $218,690 $251,890Annual net income: Year...

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Sanchez Corporation is considering three long-term capital investment proposals. Relevant data on each project are as follows.;Project;Brown Red Yellow;Capital investment $188,930 $218,690 $251,890;Annual net income;Year 1 25,369 20,103 26,439;2 16,099 20,103 24,349;3 13,446 20,103 23,214;4 10,101 20,103 17,225;5 8,063 20,103 20,274;Total $ 73,078 $100,515 $111,501;Salvage value is expected to be zero at the end of each project. Depreciation is computed by the straight-line method. The company?s minimum rate of return is the company?s cost of capital which is 12%.;Warning;Don't show me this message again for the assignment Ok Cancel;(a);Your answer is incorrect. Try again.;Compute the annual rate of return for each project. (Round answers to 1 decimal place, e.g. 10.5%.);Annual rate of return;Project Brown 77.3 %;Project Red 91.9 %;Project Yellow 88.5 %

 

Paper#74830 | Written in 18-Jul-2015

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