A business is considering the following three capital expenditure proposals:

Proposal A - An investment of \(\$ 24000\) promising cash receipts of \(\$ 5400\) per year for 20 years.

Proposal B - An investment of \(\$ 24000\) promising a single cash receipt of \(\$ 390000\) after 20 years.

Proposal C - An investment of \(\$ 24000\) promising a cash receipt of \(\$ 4600\) each year for 19 years and \(\$ 90000\) in the 20 th year.

Required:

a Prepare an analysis to determine the acceptability of each of the capital expenditure proposals, assuming a 20 per cent minimum required rate of return.

b If only one of the three proposals can be selected for investment, which one should it be? Write a brief justification for your selection.