Welsh Industries is evaluating two alternative investment opportunities. The controller of the company has prepared the following analysis of the two investment proposals. Proposal A Proposal B Required investment in equipment $ 400,000 $ 576,000 Estimated service life of equipment 5 years 6 years Estimated salvage value $ 80,000 $ 0 Estimated annual cost savings (net cash flow) 100,000 192,000 Depreciation on equipment (straight-line basis) 64,000 96,000 Estimated increase in annual net income 36,000 57,600 Required: a. For each proposed investment, compute the following. Assume discounted at an annual rate of 10 percent. Use Exhibits 26-3 and 26-4 where necessary. (1) Payback period (2) Return on average investment (3) Net present value b. Based on your computations in part a, which proposal do you consider to be the better investment?