Author Question: Bock Construction Company is considering four proposals for the construction of new loading ... (Read 62 times)

FButt · **on:** Mar 6, 2021

Question 1

Unlike the net present value method and the internal rate-of-return method, the payback method does NOT distinguish between the origins of the cash flows.
◦ true
◦ false

Question 2

Bock Construction Company is considering four proposals for the construction of new loading facilities that will include the latest in ship loading/unloading equipment. After careful analysis, the company's accountant has developed the following information about the four proposals:

	Proposal 1	Proposal 2	Proposal 3	Proposal 4
Payback period	4 years	4.5 years	6 years	7 years
Net present value	$80,000	$178,000	$166,000	$308,000
Internal rate of return	12%	14%	11%	13%
Accrual accounting rate of return	8%	6%	4%	7%

Required:
How can this information be used in the decision-making process for the new loading facilities? Does it cause any confusion?

jaykayy05 · **Reply #1 on:** Mar 6, 2021

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