Proposals A and B each cost $400,000, have 5-year lives, and have expected total cash flows of $470,000. Proposal A is expected to provide equal annual net cash flows of $94,000, while the net cash flows for Proposal B are as follows: Cost of capital is 12%.
Year 1 $150,000
Year 2 140,000
Year 3 110,000
Year 4 50,000
Year 5 20,000
$470,000
Determine the (a) cash payback period for each proposal, (b) Net present value for each proposal and (c) Internal Rate of Return for proposal A only.