Sanchez corporation is considering three long-term capital

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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 investments $195,000 $222,000 $249,000 Annual net income: Year 1 25,017 20,253 26,241 2 16,165 20,253 24,287 3 13,321 20,253 23,018 4 10,479 20,253 17,205 5 8,384 20,253 20,345 Total $ 73,366 $101,265 $111,096 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%. Compute the following and rank the projects for each category: 1. Compute the average annual rate of return for each project. (Round your answers to 1 decimal place, e.g. 5.2.) a. Brown % rank b. Red % rank c. Yellow % rank 2. Compute the cash payback period for each project.(Round your answers to 2 decimal places, e.g. 5.25.) a. Brown years rank b. Red years rank c. Yellow years rank 3. Compute the net present value for each project.

Reference no: EM13578081

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