Capital Budgeting Project Analysis Relevant information: The firm uses a 3-year cutoff when using the payback method.The hurdle rate used to evaluate capital budgeting projects is 15%.The cash flows f

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Capital Budgeting Contrivance Analysis

Relevant information:

  1. The determined uses a 3-year cutoff when using the payback mode.
  2. The hurdle rebuke used to evaluate important budgeting contrivances is 15%.

The money flows for contrivances A, B and C are granted underneath.

                   Project A          Project B           Contrivance C

Year 0        -30,000            -20,000               -50,000

Year 1            0                    4,000                  20,000

Year 2        7,000                 5,000                  20,000

Year 3         20,000              6,000                  20,000

Year 4         20,000              7,000                    5,000

Year 5         10,000               8,000                    5,000

Year 6           5,000               9,000                    5,000

  1. Assume the contrivances are stubborn and response the following:
    • Calculate the payback time for each contrivance.
    • Which contrivance(s) would you confirm inveterebuke on the payback standard?
    • Calculate the interior rebuke of reappear (IRR) for each contrivance.
    • Which contrivances would you confirm inveterebuke on the IRR standard?
    • Calculate the net offer compute (NPV) for each contrivance.
    • Which contrivances would you confirm inveterebuke on the NPV standard? 
  2. Assume the contrivances are mutually detested and response the following:
    • Which contrivance(s) would you confirm inveterebuke on the payback standard?
    • Which contrivances would you confirm inveterebuke on the IRR standard?
    • Which contrivances would you confirm inveterebuke on the NPV standard?

Submission Instructions:

Submit completed labor in a Excel spreadsheet.

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