Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net
ID: 2478875 • Letter: R
Question
Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $52,000 $52,000 $52,000 Cash flow from operations Year 1 50,000 26,000 52,000 Year 2 2,000 26,000 Year 3 27,000 27,000 Disinvestment 0 0 0 Life (years) 3 years 3 years 1 year (a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 10 percent. Round accounting rate of return four decimal places. Round net present value to the nearest whole number. Use negative signs with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Answer Answer Answer Answer Accounting rate of return Answer Answer Answer Answer Net present value Answer Answer Answer Answer
Explanation / Answer
Net present value
Payaback period
Note : Ask other part seperately
Proposal X Y Z Net cash Inflows Year 1 50000 26000 52000 PV Fator @ 10% for 1 year 0.91 0.91 0.91 PV of Cash Flow for year 1 45500 23660 47320 Net cash Inflows Year 2 2000 26000 0 PV Fator @ 10% for 2 year 0.83 0.83 0.83 PV of Cash Flow for year 2 1660 21580 0 Net cash Inflows Year 3 27000 27000 0 PV Fator @ 10% for 3 year 0.75 0.75 0.75 PV of Cash Flow for year 3 20250 20250 0 Net Cash Present value of Cash Inflows of all three years 67410 65490 47320 Initial Investment 52000 52000 52000 Net preset value of proposal 15410 13490 -4680Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.