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Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive

Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value

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

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 12 percent.

Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. 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 12 percent.

Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate.

Proposal A Proposal B Proposal C Best proposal
Payback period (years); Round answers 2 decimal places.

Answer

Answer

Answer

AnswerABCA,BA,CB,C

Accounting rate of return; Round answers to 4 decimal places.

Answer

Answer

Answer

AnswerABCA,BA,CB,C

Net present value; Round answers to nearest whole number.

Answer

Answer

Answer

AnswerABCA,BA,CB,C

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