=+P15-6 Capital rationing decision involving four proposals Objs 2, 4 SPREADSHEET

/ 5. Proposal B, 1.18 Madison 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:

Proposal A:

Proposal B:

Proposal C:

Proposal D:

Investment

$540,000

$250,000

$640,000

$310,000 Year Income from Operations Net Cash Flow 1 $ 42,000 $150,000 2 42,000 150,000 3 42,000 150,000 4 (18,000) 90,000 5 (18,000) 90,000

$ 90,000 $630,000 1 $ 50,000 $100,000 2 40,000 90,000 3 30,000 80,000 4 15,000 65,000 5 15,000 65,000

$150,000 $400,000 1 $ 92,000 $220,000 2 82,000 210,000 3 82,000 210,000 4 62,000 190,000 5 32,000 160,000

$350,000 $990,000 1 $ 68,000 $130,000 2 38,000 100,000 3 (2,000) 60,000 4 (2,000) 60,000 5 (2,000) 60,000

$100,000 $410,000