(BBI) is reviewing the following investment proposal for 2018:

Initial Investment

Depreciable Assets

$27,740

Working Capital

$3,000

Operations (per year for 4 years)

Cash Receipts

$25,000

Cash expenditures

$15,000

Disinvestment

Salvage value of the equipment

$2,000

Recovery of working capital

$3,000

a)Determine the payback period. (10 marks)

b)Accounting rate of return on initial investment and on average investment. (10 marks)

c) The above capital investment proposal based on the finance team assessment is favourable. Please identify and discuss factors that BBI's management team should consider after the initial screening of the capital investment in the equipment, before making a final evaluation of the investment. (25 marks)