Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $52,000 $52,000 $52,000 Cash flow from operations Year 1 50,000 26,000 52,000 Year 2 2,000 26,000 Year 3 27,000 27,000 Disinvestment 0 0 0 Life (years) 3 years 3 years 1 year (a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 10 percent. Round accounting rate of return four decimal places. Round net present value to the nearest whole number. Use negative signs with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Answer 2 Answer 2 Answer 1 Answer Accounting rate of return Answer 0.1667 Answer 0.1667 Answer 0 Answer Net present value Answer 15,393 Answer 13,409 Answer (4,732) Answer (b) Factors explaining the differences in rankings include all of the following except: The net present value method considers the cost of capital while the payback method does not discount future cash flows. Net present value considers the timing of cash flows while payback considers only total cash flows. While the accounting rate of return explicitly considers the cost of the asset as part of annual depreciation the net present value method considers the cost of the asset as part of the initial investment. The accounting rate of return considers profitability while payback only considers the time required to recover the investment. Mark 1.00 out of 1.00