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 flow 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 return of 12% 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.

1. Compute the cash payback period for each of the four proposals.

	Cash Payback Period
Proposal S:	Select 4 years3 years3 years 4 months2 years3 years 9 months
Proposal T:	Select 2 years2 years 9 months3 years3 years 3 months4 years
Proposal U:	Select 3 years3 years 3 months2 years 9 months3 years 6 months4 years
Proposal V:	Select 3 years3 years 6 months2 years 6 months2 years 8 months3 years 10 months

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 S:	%
Proposal T:	%
Proposal U:	%
Proposal V:	%

3. Using the following format, summarize the results of your computations in parts (1) and (2) by placing the calculated amounts in the first two columns and indicating which proposals should be accepted for further analysis and which should be rejected.

Proposal	Cash Payback Period	Average Rate of Return		Accept for Further Analysis	Reject
S	Select 3 yrs.,6 mos.2 yrs.4 yrs.2 yrs.,9 mos.Item 9		%	Select Yes No	Select Yes No
T	Select 3 yrs.,6 mos.3 yrs.4 yrs.2 yrs.,9 mos.			Select Yes No	Select Yes No
U	Select 3 yrs.,6 mos.3 yrs.4 yrs.2 yrs.,9 mos.			Select Yes No	Select Yes No
V	Select 3 yrs.,6 mos.2 yrs.4 yrs.2 yrs.,9 mos.			Select Yes No	Select Yes No

4. 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 in table above. Round to the nearest dollar.

Select the proposal accepted for further analysis.	Select Proposal S Proposal T	Select Proposal U Proposal V
Present value of net cash flow total:	$	$
Less amount to be invested:	$	$
Net present value:	$	$

5. Compute the present value index for each of the proposals in part (4). If required, round your answers to two decimal places.

Select proposal to compute Present value index.	Select Proposal S Proposal T	Select Proposal U Proposal V
Present value index (rounded):

6. Rank the proposals from most attractive to least attractive, based on the present values of net cash flows computed in part (4).

Rank 1st	Select Proposal S Proposal T Proposal U Proposal V
Rank 2nd	Select Proposal S Proposal T Proposal U Proposal V

7. Rank the proposals from most attractive to least attractive, based on the present value indexes computed in part (5).

Rank 1st	Select Proposal S Proposal T Proposal U Proposal V
Rank 2nd	Select Proposal S Proposal T Proposal U Proposal V