Question
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 X | Proposal Y | Proposal Z | |
|---|---|---|---|
| Initial investment | $92,000 | $92,000 | $92,000 |
| Cash flow from operations | |||
| Year 1 | 90,000 | 46,000 | 92,000 |
| Year 2 | 2,000 | 46,000 | |
| Year 3 | 47,500 | 47,500 | |
| 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 14 percent. Round accounting rate of return four decimal places. Round net present value to the nearest whole number.
| Proposal X | Proposal Y | Proposal Z | Best proposal | |
|---|---|---|---|---|
| Payback period (years) | ||||
| Accounting rate of return | ||||
| Net present value |
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Implementing Standardized Work Training And Auditing
Authors: Alain Patchong
1st Edition
146656363X, 978-1466563636
