The management of Ortega Manufacturing has three different proposals under consideration. The Accounting Department has prepared the following information: Proposal AProposal BProposal CInitial investment$ 3,100,000 $ 2,450,000 $ 2,055,000 Useful life of equipment7Years7Years7YearsEstimated salvage value$ 0 $ 400,000 $ 100,000 Payback period4.2Yea

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

	Proposal A		Proposal B		Proposal 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 discounted at 15%*	$ (30,000)		$ 21,600		$ 15,800

Based on the above data, which of the following is false?

Proposal A's negative net present value indicates that this alternative will not generate management's required rate of return.
Proposal A should be considered unacceptable.
Although proposals B and C are each acceptable, proposal B is a better investment considering the time value of money.
Proposal C is the best alternative because it has the shortest payback period, which is the most meaningful of the capital budgeting statistics.

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