Sonic, Inc., sells business software. Currently, all of its programs come on disks. Due to their complexity, some of these applications occupy as many as seven disks. Not only are the disks cumbersome for customers to load, but they are relatively expensive for Sonic to purchase. The company does not intend to discontinue using disks altogether. However, it does want to reduce its reliance on the disk medium. Two proposals are being considered. The first is to provide software on computer chips. Doing so requires a $300,000 investment in equipment. The second is to make software available through a computerized "software bank." In essence, programs would be downloaded directly from Sonic using telecommunications technology. Customers would gain access to Sonic's mainframe; specify the program they wish to order; and provide their name, address, and credit card information. The software would then be transferred directly to the customer's hard drive, and copies of the user's manual and registration material would be mailed the same day. This proposal requires an initial investment of $240,000. The following information pertains to the two proposals. Due to rapidly changing technology, neither proposal is expected to have any salvage value or an estimated life exceeding six years. The only difference between Sonic's incremental cash flows and its incremental income is attributable to depreciation. A minimum return on investment of 15 percent is required. Use straight-line depreciation method. Required: a. Compute the payback period of each proposal. (Round your answers to 1 decimal place.) Required: a. Compute the payback period of each proposal. (Round your answers to 1 decimal place.) Answer is complete and correct. b. Compute the return on average investment of each proposal. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be considered as 12.34.)) Answer is complete but not entirely correct. c. Compute the net present value of each proposal using the tables in and (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest whole dollar amount.) Answer is complete but not entirely correct. d. What nonfinancial factors should be considered? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Employee morale Corporate image Social responsibility Future industry trends Risk of computer virus Most protection from piracy and theft