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jerico jerico
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9 years ago
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 A   Proposal B   Proposal C
Initial investment in equipment   $90,000   $90,000   $90,000
Annual cash increase in operations:         
   Year 1   80,000   45,000   90,000
   Year 2   10,000   45,000   0
   Year 3   45,000   45,000   0
Salvage value   0   0   0
Estimated life   3 yrs   3 yrs   1 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?
Textbook 
Cost Accounting

Cost Accounting


Edition: 14th
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cyborgcyborg
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9 years ago
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jerico Author
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#2
9 years ago
I can confidently say that it looks and sounds right lol Thank you Slight Smile Give this man a thumbs up.
wrote...
#3
9 years ago
Cool! No problem.
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