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help.. Kopecky Industries Inc. is considering allocating a limited amount of capital investment funds among four proposals, The amount of proposed investment, estimated income from
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Kopecky Industries Inc. is considering allocating a limited amount of capital investment funds among four proposals, The amount of proposed investment, estimated income from operations, and net cash fow for each proposal are as follows: The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of retum of 20% 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. Required 1. Compute the cash paytack period for each of the four proposals. Assume that net cash fows are uniform throughout the year: Glving 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, Round to one decimal place. 3. Using the results from parts (1) and (2) determine which proposals should be accepted for further analysis and which should be rejected. For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 12% and the present value of $1 table above. If required, use the minus sign to indicate a subtraction or negative net present value. 5. Compute the present value index for each of the propesals in part (4). Round to two decimal places. Compute the present value index for each of the proposals in part (4). Round to two decimal places. 6. Rank the proposals from most attractive to least attractive, based on the present values of net cash flows computed in part (4). Rank. ist Rank 2nd 7. Rank the proposais from most attractive to least attractive, b 3 .ed on the present value indexes computed in part (5). Rank ist Rank 2nd 8. Based on your calculations above, complete the statements below. Looking at the present value computations, has the larger net present value. is attractive in terms of amount of present value per dollar invested. Comparing the two proposals, their present value indices have a significant difforona has the larger initial investment. Considering all this information, Kopecky should proceed with Step by Step Solution
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