Welsh Industries is evaluating two alternative investment opportunities. The controller of the company has prepared the following analysis of the two investment proposals:

Instructions
a. For each proposed investment, compute the
(1) Payback period,
(2) Return on average investment, and
(3) Net present value, discounted at an annual rate of 10 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. Based on your computations in part a, which proposal do you consider to be the better investment? Explain.

Proposal A Proposal B $375,000 6 years 5 years $15,000 90,000 63,000 27,000 88,000 62,500 25,500 Estimated annual net cash flow. _. . . ..._ _. . . . . Estimated annual net income _. . . ..._ _. . . . .