Hentgen and Ferraro, baseball consultants, are in need of a microcomputer network for their staff. They have received three proposals, with related facts as follows:
Annual cash increase in operations:
The company uses straight-line depreciation for all capital assets. Ignore income taxes.
Required:
a. Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a discount rate of 14 percent.
b. Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Why?

Question

Hentgen and Ferraro, baseball consultants, are in need of a microcomputer network for their staff. They have received three proposals, with related facts as follows:
  Annual cash increase in operations:
  The company uses straight-line depreciation for all capital assets. Ignore income taxes.
Required:
a. Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a discount rate of 14 percent.
b. Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Why?

Quizplus · Accepted Answer

The Answer of Hentgen and Ferraro, baseball consultants, are in need of a microcomputer network for their staff. They have received three proposals, with related facts as follows:
  Annual cash increase in operations:
  The company uses straight-line depreciation for all capital assets. Ignore income taxes.
Required:
a. Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a discount rate of 14 percent.
b. Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Why?

Hentgen and Ferraro, Baseball Consultants, Are in Need of a Microcomputer