Instructions

a$.$ For each proposal, compute the $(1)$ payback period, $(2)$ return on average investment, and $(3)$ net present value, discounted at management's required rate

of return of $15$ percent. $($Round the payback period to the nearest tenth of a year and the return on investment to the nearest tenth of a percent.$)$ Use

Exhibits $26-3$ and $26-4$ where necessary.

b$.$ On the basis of your analysis in part a$,$ state which proposal you would recommend and explain the reasoning behind your choice.