Capital rationing decision for a service company involving four proposals Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated operating income, and net cash flow for each proposal are as follows: Operating Net Cash Investment Year Income Flow Proposal A: $500,000 1 $ 45,000 $ 145,000 N 40,000 140,000 W 25,000 125,000 20,000 120,000 5,000 105,000 $135,000 $635,000 Proposal B: $400,000 $ 40,000 $ 120,000 20,000 100,000 W N 10,000 90,000 A 10,000 90,000 5,000 86,000 $ 86,000 $486,000 Proposal C: $380,000 $ 54,000 $ 130,000 49,000 125,000 W 49,000 125,000 A 44,000 120,000 Un 44,000 120,000 $240,000 $620,000 Proposal D: $675,000 $135,000 $270,000 N 120,000 255,000 W 90,000 225,000 15,000 150,000 un 10,000 145,000 $370,000 $1,045,000The company's capital rationing policy requires a maximum cash payback period of 3 years. In addition, a minimum average rate of return of 10% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 N 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1. Compute the cash payback period for each of the four proposals. Cash Payback Period Proposal A Proposal B Proposal C Proposal D 2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four proposals. If required, round your answers to one decimal place. Average Rate of Return Proposal A Proposal B % Proposal C Proposal D %