Presented is information pertaining to the cash flows of three mutually exclusive investment proposals:

Required

a. Rank these investment proposals using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization’s cost of capital is 12 percent. Round calculations to four decimal places.

b. Explain the difference in rankings. Which investment would you recommended

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Initial investment....... Cash flow from operations Year 1 Year 2 Year 3 Disinvestment. Life (years) Proposal A Proposal B Proposal C $60,000 $60,000 $60,000 50,000 30,000 60,000 6,000 30,000 29,000 25,000 0 0 0 3 years 3 years 1 year