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The score of the problems will be awarded taking into consideration the process carried out to arrive at the answers (calculations), so you must write
The score of the problems will be awarded taking into consideration the process carried out to arrive at the answers (calculations), so you must write how you did the calculations. Luis and Alex, consultants, need a computer network for the use of their employees. They have before them three different proposals whose data are reflected in the following table Proposal A Proposal B Proposal C Begining Investment $90,000 $80,000 $70,000 Purchase of Equipment Annual increase in cash from operations per year: Year 1 50,000 45,000 15,000 Year 2 30,000 35,000 75,000 Year 3 35,000 20,000 0 Estimated useful life 3 years 2 years The assets shown in that table depreciate in a straight line. Use the data in the table to answer the following questions: Calculate the payback period (6 points) Calculate the accrual accounting rate of return for each proposal. Use a required rate of return of 14%. (6 points) Order each proposal in terms of each of the above counts. Which proposal is the most recommended? Explain. (5 points) 3 years
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