Uspital Rationing Decision for a Service Company Involving Four Proposals Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated Income from operations, and net cash flow for each proposal are as follows: Investment Year Income from Operations $ 64,000 Net Cash Flow Proposal A: $680,000 64,000 64,000 24,000 24,000 $ 200,000 200,000 200,000 160,000 160,000 $240,000 $ 920,000 Proposal B: $320,000 $26.000 26,000 6,000 6,000 $ 90,000 90,000 70,000 70,000 (44,000) 20,000 $ 20,000 $340,000 Proposal C: $108,000 $ 33,400 31,400 28,400 25,400 $ 55,000 53,000 50,000 47,000 45,000 23.400 $142,000 $ 250,000 Check My Work 1 more Check My Work uses remaining Previous ebook CO The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.9090.893 0.870 0.833 0.756 0.694 0.658 0.579 0.482 0.572 0.497 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 .558 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.432 0.376 0.327 0.284 0.247 0.402 0.335 0.279 0.233 0.194 0.162 10 0 Required: 1. Compute the cash payback period for each of the four proposals Cash Payback Period Proposal Proposal B Proposal Proposal D 2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four Previous Check My Work 1 more Check My Work uses remaining 2. Giving effect to straight-line depreciation on the investments and assuming ne estimated residual value, compute the average rate of return for each of the four proposals. If required, round your answers to one decimal place Average Rate of Return Proposal Proposal Proposal Proposal D 3. Using the following format, summarize the results of your computations in parts (1) and (2) by placing the calculated amounts in the first two columns on the left and indicate which proposals should be accepted for further analysis and which should be rejected. If required, round your answers to one decimal place. Proposal Cash Payback Period Average Rate of Retur Accept or Reject dropdown and the procent value of table above Round to the 4. For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 15 nearest dollar Select the proposal accepted for further analysis Present value of net cash how total Less amount to be invested Not present value Check My Work 1 more Checy Worker Previous Emal instructor Save and Submit Assignment for Grading 6,000 6.000 (44,000) $ 20,000 70,000 70,000 20,000 $340,000 Proposal C: $108,000 $33,400 31,400 28.400 25,400 23,400 $142,000 $ 55,000 53,000 50,000 47,000 45,000 $ 250,000 Proposal D $400,000 $100,000 100,000 80,000 20,000 $ 180,000 180,000 160,000 100,000 80,000 $300,000 $700,000 The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0 .9430.909 0.893 0.870 0.833 2 0 .890 0.826 0.797 0.756 0.694 3 0 .540 0.751 0.712 0.658 0.579 0.792 0.68 0.636 0,572 0.482 Check My Work 1 more Check My Wort uses remaining Previous Uspital Rationing Decision for a Service Company Involving Four Proposals Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated Income from operations, and net cash flow for each proposal are as follows: Investment Year Income from Operations $ 64,000 Net Cash Flow Proposal A: $680,000 64,000 64,000 24,000 24,000 $ 200,000 200,000 200,000 160,000 160,000 $240,000 $ 920,000 Proposal B: $320,000 $26.000 26,000 6,000 6,000 $ 90,000 90,000 70,000 70,000 (44,000) 20,000 $ 20,000 $340,000 Proposal C: $108,000 $ 33,400 31,400 28,400 25,400 $ 55,000 53,000 50,000 47,000 45,000 23.400 $142,000 $ 250,000 Check My Work 1 more Check My Work uses remaining Previous ebook CO The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.9090.893 0.870 0.833 0.756 0.694 0.658 0.579 0.482 0.572 0.497 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 .558 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.432 0.376 0.327 0.284 0.247 0.402 0.335 0.279 0.233 0.194 0.162 10 0 Required: 1. Compute the cash payback period for each of the four proposals Cash Payback Period Proposal Proposal B Proposal Proposal D 2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four Previous Check My Work 1 more Check My Work uses remaining 2. Giving effect to straight-line depreciation on the investments and assuming ne estimated residual value, compute the average rate of return for each of the four proposals. If required, round your answers to one decimal place Average Rate of Return Proposal Proposal Proposal Proposal D 3. Using the following format, summarize the results of your computations in parts (1) and (2) by placing the calculated amounts in the first two columns on the left and indicate which proposals should be accepted for further analysis and which should be rejected. If required, round your answers to one decimal place. Proposal Cash Payback Period Average Rate of Retur Accept or Reject dropdown and the procent value of table above Round to the 4. For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 15 nearest dollar Select the proposal accepted for further analysis Present value of net cash how total Less amount to be invested Not present value Check My Work 1 more Checy Worker Previous Emal instructor Save and Submit Assignment for Grading 6,000 6.000 (44,000) $ 20,000 70,000 70,000 20,000 $340,000 Proposal C: $108,000 $33,400 31,400 28.400 25,400 23,400 $142,000 $ 55,000 53,000 50,000 47,000 45,000 $ 250,000 Proposal D $400,000 $100,000 100,000 80,000 20,000 $ 180,000 180,000 160,000 100,000 80,000 $300,000 $700,000 The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0 .9430.909 0.893 0.870 0.833 2 0 .890 0.826 0.797 0.756 0.694 3 0 .540 0.751 0.712 0.658 0.579 0.792 0.68 0.636 0,572 0.482 Check My Work 1 more Check My Wort uses remaining Previous
