5. Capital budgeting(25 points)

Mason Co. is evaluating two alternative investment proposals. Below are data for each proposal:

The following information was taken from present value tables:

All revenue and expenses other than depreciation will be received and paid in cash. The company uses a discount rate of 12% in evaluating all capital investments.

Compute the following for each proposal (round payback period to the nearest tenth of a year and round return on average investment to the nearest tenth of a percent):

	Proposal A	Proposal B
(a) Annual net cash flow:	$	$
(b) Payback period (in years):
(c) Average investment:	$	$
(d) Return on average investment:	%	%
(e) Net present value:	$	$

(f) Based on your analysis, which proposal appears to be the best investment?

5. Capital budgeting Mason Co. is evaluating two alternative investment proposals. Below are data for each proposal: The following information was taken from present value tables: All revenue and expenses other than depreciation will be received and paid in cash. The company uses a discount rate of 12% in evaluating all capital investments. Compute the following for each proposal (round payback period to the nearest tenth of a year and round return on average investment to the nearest tenth of a percent): (a) Annual net cash flow: (b) Payback period (in years): (c) Average investment: (d) Return on average investment: (e) Net present value: Proposal A $ Proposal B $ $ $ % $ (f) Based on your analysis, which proposal appears to be the best investment? % $