The management of Kleinburg Industrial Bakery is analyzing two competing investment projects and they must decide which one can be done immediately and which one can be postponed for at least a year.

The bakery has a 12% required rate of return to evaluate all investments that directly impact operations and amortizes the investment in plant and equipment using straight- line depreciation over 10 years on the difference between the initial investment and terminal disposal price.

The details of each proposed investment are as follows:

Proposed by Rationale Investment Working Capital Terminal disposal value Expected useful life Expected increase in operating income Expected savings in administrative costs Project A Increase Capacity to Serve New Markets Production manager Assets are operating at full capacity and we are unable to attend to all the demand, therefore we need to expand our facilities to produce more kilograms. $ 600,000 $ 50,000 $ 60,000 10 years $ 400,000 none Project B Upgrade Customer Service Sales and marketing manager The eet of trucks and vans need to be upgraded with tracking devices and remote connections to ex the planning routes. 'lhe new software will allow the company to be paperless and respond faster to customers' requests $ $ 345,000 1 50,000 None 5 years 80,000 40,000