Help Accounting

Problem #2 (70 points): In this folder there are files containing project data that you are to use in a capital analysis. There are three proposals (A,B & C) with net annual cash inflows for five years. Below is the table from the project file with the information that you will be calculating. Based on the combination of cash payback, net present value (NPV) and profitability index, you should be able to choose the best proposal to recommend to management. There are two questions to answer at the very bottom of the data file. Cash Payback Proposal Period Present Value of Net Annual Cash Net Present flows Value Profitability Index Company Standards: Cash payback period 3 year maximum Minimum Average Rate of Return: 12% PV factor 12% PV of Net Cash Flows Proposal A: Year Investment $ 450,000 Net Cash Flow 1 $ 120.000 120.000 110,000 100 000 60,000 510,000 Proposal B: $ 200,000 100,000 80.000 60,000 30,000 20,000 290,000 Proposal C S 320,000 100,000 90,000 90.000 80.000 80,000 440,000 Return Rate: 12% Cash Payback Period Present Value of Net Annual Net Present Cash flows value Profitability index Proposal 1. Calculate the values for each proprosal. 2. Which proposal would you choose? Why