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Ross Company is considering three alternative investment proposals. Using the following information, rank the proposals in order of desirability using the payback period method. Proposal

Ross Company is considering three alternative investment proposals. Using the following information, rank the proposals in order of desirability using the payback period method.

Proposal

A

B

C

Initial outlay

$ 360,000

$ 360,000

$ 360,000

Net cash inflow (after taxes):

First year

$ -0-

$ 90,000

$ 90,000

Second year

180,000

270,000

180,000

Third year

180,000

90,000

270,000

Fourth year

90,000

180,000

450,000

$ 450,000

$ 630,000

$ 990,000

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