Acceptability of each of the capital expendature proposals

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Reference no: EM131265438

A company is considering the following three capital expenditures proposals:

(a) An investment of $10,000 promising cash reciepts of $3,600 per year for 5 years.

(b) An investment of $10,000 promising a single cash reciept of $200,000 after 5 years.

(1) Prepare an analysis to determine the acceptability of each of the capital expendature proposals, assuming a 16% minimum required rate of return.

(2) If only one of the three proposals can be selected for investment, which one should it be? Write a brief justification for your selection.

Reference no: EM131265438

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