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Author Question: Gavin and Alex, baseball consultants, are in need of a microcomputer network for their staff. They ... (Read 3243 times)

sdfghj

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Gavin and Alex, baseball consultants, are in need of a microcomputer network for their staff. They have received three proposals, with related facts as follows: 

Proposal AProposal BProposal C
Initial investment in equipment$90,000$90,000$90,000
Annual cash increase in operations:
   Year 180,00045,00090,000
   Year 210,00045,0000
   Year 345,00045,0000
Salvage value000
Estimated life3 yrs3 yrs1 yr
The company uses straight-line depreciation for all capital assets. 

Required: 
a.  Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a required rate of return of 14%. 

b.  Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Why?


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Marked as best answer by sdfghj on Mar 6, 2021

Tonyam972

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