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%)