The firm evaluates all major investment proposals using the net present value method with the estimated long-term (five years) cost of capital as the discount rate. In addition, the firm also uses the payback method in its analysis of investment proposals. However, a short payback period is not necessary to justify investment in a project if the project is considered to be among the best in terms of investment proposals. A review of the proposals submitted over the last few years revealed that these proposals ranked consistently higher based upon the net present value method.