Reference no: EM132528134

The management of Ortega Manufacturing has three different proposals under consideration. The Accounting Department has prepared the following information:

                                                               A                            B                        C

Initial investment                         $3,100,000       $2,450,000           $2,055,000

Useful life of equipment                   7 Years              7 Years              7 Years

Estimated salvage value                         $0               $400,000               $100,000

payback period                               4.2 Years              4.4 Years             4 Years

Net present value discount at 15%*       $(30,000)            $21,600              $15,800

Question 1: Which of the above proposals generates the greatest annual cash flow?