Capital Budgeting

The company is considering three different investments involving depreciable assets with no salvage value. The following data relate to these investments: expected life of proposal (years) investment initial cash outlay $165,000 $220,000 $320,000 cash inflow before tax $41,000 $60,000 $75,000 9 18 The income tax rate is 40%. Management requires a minimum return on investment of 9% Rank these proposals using the following selection techniques: a. Payback period b. Unadjusted rate of return c. Net present value method