ACCT 406 Compute annual rate of return, cash payback, and net present value

P12-1A – Compute annual rate of return, cash payback, and net present valueManagerial Accounting, 6th Edition, by Weygandt, Kieso, and KimmelPrimer on Using Microsoft Excel in Accounting by Rex A SchildhouseProblem P12-1A Henkel Company is considering three long-term capital investment proposals. Each investment has a usefullife of 5 years. Relevant data on each project are as follows:Project KiloCapital investment:$150,000Salvage value:$0Annual net income:Year:114,000214,000314,000414,000514,000Total:$70,000Project Lima$165,000$0Project Oscar$200,000$018,00017,00016,00012,0009,000$72,00027,00023,00021,00013,00012,000$96,000Depreciation is computed by the straight-line method with no salvage value. The company’s cost of capital is:(Assume that cash flows occur evenly throughout the year.)15%Instructions:(a) Compute the cash payback period for each project. (Round to two decimals.)Project KiloDepreciation per year = Area for formulaCash payback period = Area for formulaProject LimaDepreciation =Project OscarDepreciation =Area for formulaYear12345AnnualCumulativeDepreciationCashCashValue:Inflow:Inflow:AmountAmountFormulaAmountAmountFormulaAmountAmountFormulaAmountAmountFormulaAmountAmountFormulaArea for formulaArea for formulaArea for formulaArea for formulaYear12345Area for formulaArea for formulaArea for formulaAnnualDepreciationCashValue:Inflow:AmountAmountAmountAmountAmountAmountAmountAmountAmountAmountCumulativeCashInflow:FormulaFormulaFormulaFormulaFormulaName: SolutionCourse:Date:(b) Compute the net present value for each project. (Round to nearest dollar.)Year12345TotalDiscountFactorProject KiloCashInflowPVFormulaFormulaFormulaFormulaFormulaAmountAmountAmountAmountAmountFormulaCapital investment:Positive (negative) net present value:Project LimaCashInflowPVFormulaFormulaFormulaFormulaFormulaFormulaAmountFormulaAmountAmountAmountAmountAmountFormulaFormulaFormulaFormulaFormulaFormulaFormulaAmountFormulaProject OscarCashInflowPVAmountAmountAmountAmountAmountFormulaFormulaFormulaFormulaFormulaFormulaFormulaAmountFormula(c) Compute the annual rate of return for each project. (Round to two decimals.) (Hint: Use average annual net income in yourcomputation.)Project Kilo Formula or percentage as desired.Project Lima Formula or percentage as desired.Project Oscar Formula or percentage as desired.(d) Rank the projects on each of the foregoing bases. Which project would you recommend?ProjectProject KiloProject LimaProject OscarEnter your text answer here.Cash PaybackNumberNumberNumberNetPresentValueNumberNumberNumberAnnualRate ofReturnNumberNumberNumber