The following investment proposals are independent. Assuming a required rate of return of 10 per cent, and using net present valuation methods, which of the proposals are acceptable?

proposal A:-

Cash flows:

year 0= -40,000

year 1= 8,000

year 2= 48,000

Proposal B:-

year 0= -40,000

year 1= 42,000

Proposal c:-

year 0= -40,000

year 1= 48,000

using the following data, calculate the :

a) Payback period

b) Net present value

Project cost: $100 000

Estimated life: 5 years

Estimated residual value: $20 000

Annual net cash flow: $30 000

Required rate of return: 10%