Proposal W Proposal X Proposal Y Proposal Z Initial Investment $5,000 $45,000 $45,000 $45,000 Cash Flow From Operations: Year 1 $5,000 $40,000 $22,500 $45,000 Year 2 $2,000 $5,000 $22,500 $0 Year 3 $2,000 $22,500 $22,500 $0 Disinvestment $0 $0 $0 $0 Project Life 3 Years 3 Years 3 Years 1 year Assume a desired rate of return (discount rate) = 10% Calculate each metric listed below for each project. Rank projects in order of preference based solely on that metric (1 = best choice). Which project to invest in if you can only invest in one project? Payback period (based on annual cash flows) Accounting Rate of Return Net Present Value 1. Considering the metrics calculated for each project and the priority rankings for every project based on each metric, what is the "best" project to choose if you could only do one? Explain your answer. 2. Why do the different project metrics shown suggest different rankings in terms of the best project? If there is one best metric to use in deciding on projects to pursue, is there any merit to calculating the other project performance measures? Explain. Internal Rate of Return Perceived Risk