(3) WANDA orders most of its items in lot sizes of 10 units. Average annual demand per side of beef is 720 units per year. Ordering costs are $25 per order with an average purchasing price of $100. Annual inventory carrying costs are estimated to be 40% of the unit cost. Compute the annual cost savings if the shop changes from an order size of 10 units to the economic order quantity. Show computations. (5%)

3. APPLE is in need of a microcomputer network for its staff. The company uses straight-line depreciation for all capital assets. Annual required rate of return is 14%. The company has 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 years | 3 years | 1 year | Required: Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Show computations. Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Why? (15%)

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