Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal
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Question:
Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: | ||||||||
Proposal X | Proposal Y | ProposalZ | ||||||
Initial investment | $ (80,000.00) | $ (80,000.00) | $ (80,000.00) | |||||
Cash flow from operations | ||||||||
Year 1 | $ 50,000.00 | $ 40,000.00 | $ 100,000.00 | |||||
Year 2 | $ 10,000.00 | $ 30,000.00 | $ - | |||||
Year 3 | $ 40,000.00 | $ 30,000.00 | $ - | |||||
Disinvestment | $0.00 | $0.00 | $0.00 | |||||
Life (years) | 3 years | 3 years | 1 year | |||||
Select thebestinvestment proposalusing the payback period, and the accounting rate of return on initial investment. Assume that the organization's cost of capital is 12 percent, and the initial investment is fully depreciated over the project timeline. | ||||||||
Use a negative sign with your answers, when appropriate. | ||||||||
Payback period (years) | ||||||||
Proposal X | years | |||||||
Proposal Y | years | |||||||
Proposal Z | years | |||||||
Best proposal: | ||||||||
Accounting rate of return | ||||||||
Proposal X | ||||||||
Proposal Y | ||||||||
Proposal Z | ||||||||
Best proposal: |
Posted Date: