Presented is information pertaining to the cash flows of three mutually exclusive investment proposals:

Proposal A Proposal B Proposal C

Initial investment.................$60,000 $60,000 $60,000

Cash flow from operations

Year 1...............................50,000 30,000 60,000

Year 2................................6,000 30,000

Year 3...............................29,000 25,000

Disinvestment......................0 0 0

Life (years).....................3 years 3 years 1 year

Required

1. Rank these investment proposals using the payback period, the accounting rate of return on initial investment, and the present value criteria. Assume that the organizations cost of capital is 12 percent. Round calculations to four decimal places.
2. Explain the difference in rankings. Which investment would you recommend?