Purchase Solution

Three proposals for Gavin and Alex for a nicrocomputer network

Not what you're looking for?

Ask Custom Question

See the attachment.

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.

Question 1: 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%.
Question 2: Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Why?

Attachments
Purchase this Solution
Solution Summary

The solution evaluates three proposals for Gavin and Alex for a nicrocomputer network.

Solution Preview

Please find the solutions attached.

a. Payback Method

Payback for Proposal A: Year 1 $80,000
Year 2 10,000
Payback is 2 years $90,000

Payback for Proposal B: Year 1 $45,000
Year 2 45,000
Payback is 2 years $90,000

Payback for proposal C: Year 1 $90,000
Payback is 1 year

Net Present Value:

Proposal A: Predicted
Cash Flows Year(s) PV Factor PV of
Cash ...

Solution provided by:
Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
Recent Feedback
  • "ty i have more need help with"
  • "ty i have jmore i need help with"
  • "great help"
  • "excellent help"
  • "Very helpful and easy to understand."
Purchase this Solution
Free BrainMass Quizzes
Motivation

This tests some key elements of major motivation theories.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

View More Free Quizzes
Related BrainMass Solutions

  • Family Violence - Stalking

    This was the first and the last time Gavin contacted Sandra, giving her a reason to fear for her life, although it haunted her from that day forward. Would you categorize Gavin's actions as stalking? Why or why not?

  • "network effect"

    Source: http://www.udel.edu/alex/dictionary.html From a strategic marketing perspective, it is extremely important for marketeer to understand the network effect.

  • Net present value analysis: AOL, Cisco, Huawei

    The first bid, from Huawei, will require a $23 million upfront investment and will generate $20 million in savings for AOL each year for the next three years.

  • Request for proposal regarding an office move

    • Designing and installation of Local Area Network cabling for computer systems and workstations • Adjustments in lightning to meet needs of new arrangement of office IV.

  • Pre-Algebra : Writing Equations from Word Problems

    To build a dog house for his Chihuahua, Brian goes to Home Depot for some supplies. He buys a hammer for $5.75, wood for $24.75, nails for $4, and three small containers of paint. He also used a $25 coupon.

  • Coaching for Optimal Performance Using Big 5 Factors

    James has worked for Jeffries, Smith, and West for three years and has developed a reputation of "playing hard," but not always "working hard." Alex has worked with James on two separate occasions.

  • Marginal & Conditional Probabilities

    434620 statistics A box contains six parts. Two of the parts are defective and four are ok. If three of the six parts are selected from the bin, how large is the sample space? Which counting rule did you use, and why?

  • CPM network-Critical path

    68676 What is critical path for this project? How long will it take to complete the project? Please draw a CPM network diagram for this project. You are in the process of selecting and awarding a major contract as quickly as possible.

  • Criminal Justice Practitioners and Networking

    - Identify three strategies towards developing a network for job searching. 1.Join professional organizations, 2. Volunteer, 3. Join or start a job club.

View More Related Solutions