Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited $5,000,000 for the year. Lisa Bickerson, staff analyst at Halls, is preparing an analysis of the three projects under consideration by Conan Halls. the company's owner. (Click the icon to view the data for the three projects.) (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) (Click the icon to view the Present Value of $1 factors.) (Click the icon to view the Present Value of Annuity of $1 factors.) Read the requirements. Requirement 1. Because the company's cash is limited, Halls thinks the payback method should be used to choose between the capital budge projects. Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.) Project A years Project B | years Project C years Using the payback method, which project(s) should Halls choose? Data Table Project A Project B Project C Projected cash outflow Net initial investment $ 3,000,000 $ 2,100,000 $ 3,000,000 Projected cash inflows Year 1 $ 1,200,000 $ 1,200,000 $ 1,700,000 Year 2 1,200,000 600,000 1,700,000 Year 3 1,200,000 500,000 200,000 Year 4 1,200,000 100,000 Required rate of return 12% 12% 12% Enter any number in the edit fields and then continue
Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited $5,000,000 for the year. Lisa Bickerson, staff analyst at Halls, is preparing an analysis of the three projects under consideration by Conan Halls. the company's owner. (Click the icon to view the data for the three projects.) (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) (Click the icon to view the Present Value of $1 factors.) (Click the icon to view the Present Value of Annuity of $1 factors.) Read the requirements. Requirement 1. Because the company's cash is limited, Halls thinks the payback method should be used to choose between the capital budge projects. Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.) Project A years Project B | years Project C years Using the payback method, which project(s) should Halls choose? Data Table Project A Project B Project C Projected cash outflow Net initial investment $ 3,000,000 $ 2,100,000 $ 3,000,000 Projected cash inflows Year 1 $ 1,200,000 $ 1,200,000 $ 1,700,000 Year 2 1,200,000 600,000 1,700,000 Year 3 1,200,000 500,000 200,000 Year 4 1,200,000 100,000 Required rate of return 12% 12% 12% Enter any number in the edit fields and then continue
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 1gM
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Question
Transcribed Image Text:Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited
$5,000,000 for the year. Lisa Bickerson, staff analyst at Halls, is preparing an analysis of the three projects under consideration by Conan Halls,
the company's owner.
(Click the icon to view the data for the three projects.)
(Click the icon to view the Future Value of $1 factors.)
(Click the icon to view the Future Value of Annuity of $1 factors.)
(Click the icon to view the Present Value of $1 factors.)
(Click the icon to view the Present Value of Annuity of $1 factors.)
Read the requirements.
Requirement 1. Because the company's cash is limited, Halls thinks the payback method should be used to choose between the capital budget
projects.
Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.)
Project A
years
Project B
years
Project C
years
Using the payback method, which project(s) should Halls choose?
i
Data Table
Project A
Project B
Project C
Projected cash outflow
Net initial investment
$ 3,000,000 $ 2,100,000 $ 3,000,000
Projected cash inflows
Year 1
$ 1,200,000 $ 1,200,000 $ 1,700,000
Year 2
1,200,000
600,000
1,700,000
Year 3
1,200,000
500,000
200,000
Year 4
1,200,000
100,000
Required rate of return
12%
12%
12%
Enter any number in the edit fields and then continue
Print
Done
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