3 Capital Rationing Decision for a Service Company involving Four Proposals Clearcast Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, esto income from operations, and net cash flow for each proposal are as follows: Income from Net Cash Investment Year Operations Flow Proposal A: $450,000 1 $ 30,000 $ 120,000 2 30,000 120,000 20,000 110,000 4 10,000 100,000 5 (30,000) 60,000 $ 60,000 $510,000 Proposal B: 200,000 1 $ 60,000 $100,000 2 40,000 80,000 3 20,000 60,000 4 (10,000) 30,000 5 (20,000) 20,000 590,000 $290,000 Proposal C: $320,000 $ 36,000 $ 100,000 2 26,000 90,000 26,000 90,000 16,000 80,000 1 3 5 1 2 3 16,000 80,000 $120,000 $140,000 Proposal $540,000 $92,000 $ 200,000 72,000 180,000 52,000 160,000 4 12,000 120,000 (8,000) 100,000 $220,000 $760,000 The company's capital rationing policy requires a maximum cash payback period of three years. In addition, mmm average rate of return of 12% is required on all projects, the preceding standards we met, the niet present value method and present value indexes are used to rank the remaining proposals Present Value of $1 at Compound Tnterest Year 6% 10% 12% 20% 1 0.943 0.89 0.870 5 0.909 OB33 0.890 0.826 0.792 0.756 0.694 0.840 0.751 0.712 0.68 0.579 4 0.792 0.683 0.036 0.572 0.482 5 0.747 0.621 0.567 0.92 0.402 0.335 6 0.705 0.507 0.432 7 0.665 0.564 0.513 0.467 0.452 0279 0.376 0.327 8 0.627 0.404 0.233 0,592 0,424 0.361 0.284 0.1944 10 0.558 0.36 0,122 0.24% 0.162 Requiredi 1. Compute the cash payback period for each of the four proposals Cash Payback Period Proposal Proposal years months Proposal years 6 months Proposal years 2. vie effect to straight-line depreciation on the investments and woming no estimated trudunt value, compute the average rate of return for each of the four proposals, required, round your answers to one del place Average rate of Return Proposal Proposal Propoul Proposal 3. Using the following format, suman the results of your computations in parts (1) and (2) by placing the calculated amounts in the first two column on the left and wdicate which proposals should be accepted for further analysis and which should be rejected. It required, round your answers to one domal place Proposal Cash Payback Period Average Rate of Return Accept or Reject 3. Using the following format, summarize the results of your computation parts (1) and (2) by placing the calculated amounts in the first two columns on the life and indicate which proposals should be accepted for further analysis and which should be rejected. If required, round your answers to one decimal place. Proposal Cash Payback Period Average Rate of Return Accept or Reject A N. Reet 2 yrs, mos Accept C yrs. mos Reject D 3Y Accept 4. For the properyals accepted for further analysis in port (), compute the net present value. Use a rate of 129 and the present value of $1 table above. Round to the nearest dollar Proposal Proposal Notes Select the proposals in alphabetic order. Select the proposal accepted for further analyses Present value of net cash flow total Less amount to be invested Net present value 5. Compute the present volut udex for each of the proposals in part (4). It required, round your answers to two decimal places Notes Select the proposal in alphabetic order Select proposal to compute Present value index Proposal Proposal Present value index crounded)