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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 Proposal Proposal Initial investment Cash flow from operations Year 1 x Y Z $92,000 $92,000 $92,000 Year 2 Year 3 Disinvestment Life (years) 90,000 46,000 92,000 2,000 46,000 47,500 47,500 0 0 0 3 years 3 years 1 year 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 14 percent. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value; Round answers to nearest whole number. 2 ▾ 17.2098 x 2▾ 1 ▾ Z ÷ 20,547 ✔ 17.2098 x 15,808 0 X,Y (11,298) X ÷

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 Proposal Proposal Initial investment Cash flow from operations Year 1 x Y Z $92,000 $92,000 $92,000 Year 2 Year 3 Disinvestment Life (years) 90,000 46,000 92,000 2,000 46,000 47,500 47,500 0 0 0 3 years 3 years 1 year 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 14 percent. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value; Round answers to nearest whole number. 2 ▾ 17.2098 x 2▾ 1 ▾ Z ÷ 20,547 ✔ 17.2098 x 15,808 0 X,Y (11,298) X ÷

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Proposal Proposal Initial investment Cash flow from operations Year 1 x Y Z $92,000 $92,000 $92,000 Year 2 Year 3 Disinvestment Life (years) 90,000 46,000 92,000 2,000 46,000 47,500 47,500 0 0 0 3 years 3 years 1 year 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 14 percent. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value; Round answers to nearest whole number. 2 ▾ 17.2098 x 2▾ 1 ▾ Z ÷ 20,547 ✔ 17.2098 x 15,808 0 X,Y (11,298) X ÷
Transcribed Image Text: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 Proposal Proposal Initial investment Cash flow from operations Year 1 x Y Z $92,000 $92,000 $92,000 Year 2 Year 3 Disinvestment Life (years) 90,000 46,000 92,000 2,000 46,000 47,500 47,500 0 0 0 3 years 3 years 1 year 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 14 percent. Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value; Round answers to nearest whole number. 2 ▾ 17.2098 x 2▾ 1 ▾ Z ÷ 20,547 ✔ 17.2098 x 15,808 0 X,Y (11,298) X ÷
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