lm/takeAssignment/takeAssignmentMain.dolin AtakeAssignmentSessionlocator inprogress-false Capital rationing decision for a service company involving four proposals Clearcast Communications Inc. 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 an follows: Operating Investment Year Income Net Cash Flow Proposal A $450,000 $30,000 $120,000 2 30,000 120,000 3 20,000 110,000 4 10,000 100,000 5 (30,000) 60,000 $60,000 $510,000 Proposal $200,000 1 $60,000 $100,000 2 40,000 80,000 3 20,000 60,000 4 (10,000) 30,000 (20,000) 20,000 $90,000 $290,000 Proposal C $320,000 1 $36,000 $100,000 2 26,000 90,000 3 26,000 90,000 4 16,000 80,000 16,000 10,000 $120,000 $440,000 Pal $540,000 1 192,000 $200,000 2 12,000 100,000 3 57,000 100,000 4 12,000 120,000 (1000) 100,000 Dieck My Works Check My W Q C arer D " 0 O Email humutter Submit Assign for Grading 239 PM Capital rationing decision for a service company involving four proposals Clearcast Communications Inc. 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 an follows: Investment Year Proposal A $450,000 Operating Income $30,000 Net Cash Flow $120,000 2 30,000 120,000 . 20,000 110,000 4 10,000 100,000 5 (30,000) 60,000 100,000 $510,000 Prope $200,000 I 160,000 $100,000 2 40,000 80,000 3 20,000 60,000 4 (10,000) 30,000 5 (20,000) 20,000 $90,000 $250,000 Proposal C $320,000 1 $36,000 $100,000 2 26,000 90,000 26,000 90,000 4 16,000 90.000 16,000 80,000 $120,000 $440,000 Proposal $540,000 1 192,000 $200,000 X 72,000 180,000 52.000 160,000 12,000 120.000 100,000 CengageNOW | Onda X ONew that m/im/takeAssignment/takeAssignmentMain.dolinvoker-&takeAssignmentSessionLocator &inprogress-false C The company's capital rationing policy requires a maximum cash payback period of 3 years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the et prent value method and present value indexes are used to rank the remaining proposals. Present Value of $1 at Compound Interest Book Print 16,000 $120,000 $440,000 Pro $540,000 1 $92.000 $200,000 2 72,000 180,000 3 52,000 160,000 4 12,000 120,000 5 (8,000) $220,000 100,000 $760,000 Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.004 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0372 0.487 3 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.375 0.279 " 0.627 6467 0.404 0.327 0.233 9 0.592 0.424 0.36 0.284 0.194 10 0.558 6.366 0.322 0.247 0.162 Required 1. Compute the cash payback period for each of the four proposals Proposal A Cash Payback Period Proposal Pro C Check My Work mos Check My Wo Q Search . a . D arer o Save and Exe Previous Sub Agent for Gadg AAG4 XNOW On tra New chal ngagenow.com/takeAgent/takeAssignmentMandalicker-takeAssignmentSessionLocator Required 1. Compute the cash payback period for each of the four prop Proposal A Pal C Cash Payback Period 2. Giving effect ta straight-e depreciation on the investments and accuming no estimated residual, compute the average rate of retum for a Proposal A Prop Proposal Cu Prope Average Rate of of the four arcons If required, round your answers to ose decimal place Using the towing format, summarize the rats of your cations in parts (1) and (2) plads the old amount and which should be rejected. It required, round your awers to one decimal place done which proposals should be scoped for father ante Proposal Cash Payback Period Average Rate of Accept of Reject A 4 the pins acted for further is in part (3) compete the present valve a rate of 2 Select the gated for hather aly ant to be Check My Work Chey Q SHARTT acer the present value of table bet, Round to the nearest dr E Save and the @ 17 look Prem mentSessionLocator Bonprogress and which should be rejected. If required, round your answers to one decimal place. Proposal B C D Cash Payback Period Average Rate of Return Accept or Reject 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 table above. Round to the nearest dollar. Select the proposal accepted for further analysis. Present value of net cash flow total Amount to be invested 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. 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 1, Rask 2nd 7. Rank the proposals from most attractive to least attractive, based on the present value indexes computed in part (5) Rank ( Rank 2nd B. The analysis indicates that although Psposal has the larger net present value, it is not as attractive as Proposal requires the larger intment. Thus, management should use investment resources for Proposal) siderations that may impact the deciden before investing in Propa Cant any her alitative