Alexander Inc. is considering four proposals for the construction of new facilities. The Accountant is supposed to evaluate four proposals.

Proposal 1 Proposal 2 Proposal 3 Proposal 4

Payback period 3 years 4 years 4 years 7 years

Net present value $80,000 $178,000 $166,000 $308,000

Internal rate of return 12% 14% 11% 13%

Accrual accounting

rate of return 8% 6% 4% 7%

Required: How can this information be used in the decision making process for the new facilities? Does it cause any confusion? Which is the best proposal in your overview and why?