Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Laura Bentley​, staff...


Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Laura Bentley​, staff analyst at Halls​,


is preparing an analysis of the three projects under consideration by Caden Halls​, the​ company's owner.


Data Table














































































A


B


C


D


1







Project A



Project B



Project C


2



Projected cash outflow








3


Net initial investment


$3,000,000


$2,100,000


$3,000,000


4



Projected cash inflows








5


Year 1


$1,200,000


$1,200,000


$1,700,000


6


Year 2


1,200,000


600,000


1,700,000


7


Year 3


1,200,000


500,000


200,000


8


Year 4


1,200,000




100,000


9


Required rate of return


6%


6%


6





















1..




Calculate the payback period for each of the three projects. Ignore income taxes. Using the payback​ method, which projects should Halls ​choose?. Ignore income taxes. ​(Round your answers to two decimal​ places.)




Project A =



Project B=



Project C=






2.




Bentley

thinks that projects should be selected based on their NPVs. Assume all cash flows occur at the end of the year except for initial investment amounts. Calculate the NPV for each project. Ignore income taxes






NPV of Project A=



NPV of Project B=



NPV of Project C=




3.




Which​ projects, if​ any, would you recommend​ funding? Briefly explain why.





Present Value of $1<br>Periods<br>2%<br>4%<br>6%<br>8%<br>10%<br>12%<br>14%<br>16%<br>18%<br>20%<br>22%<br>24%<br>26%<br>28%<br>30%<br>32%<br>40%<br>Periods<br>Period 1<br>0.980<br>0.062<br>0.043<br>0.926<br>0.900<br>0.893<br>0.877<br>0.862<br>0.847<br>0.833<br>0.806<br>0.820<br>0.672<br>0.794<br>0.781<br>0.769<br>0.758<br>0.574<br>0.714<br>Period 1<br>0.502<br>0.455<br>Period 2 0.961<br>0.925<br>0.890<br>0.857<br>0.826<br>0.707<br>0.760<br>0.743<br>0.718<br>0.694<br>0.650<br>0.630<br>0.610<br>0.510<br>Period 2<br>Period 3 0.942<br>0.889<br>0.840<br>0.794<br>0.751<br>0.712<br>0.675<br>0.641<br>0.609<br>0.579<br>0.551<br>0.524<br>0.500<br>0.477<br>0.435<br>0.364<br>Period 3<br>Period 4 0.024<br>0.855<br>0.792<br>0.735<br>0.683<br>0.636<br>0.502<br>0.552<br>0.516<br>0.482<br>0.451<br>0.423<br>0.397<br>0.373<br>0.350<br>0.329<br>0.260<br>Period 4<br>Period 5 0.908 0.822<br>0.747<br>0.681<br>0.821<br>0.567<br>0.519<br>0.476<br>0.437<br>0.402<br>0.370<br>0.341<br>0.315<br>0.201<br>0.289<br>0.250<br>0.186<br>Period 5<br>Period 6 0.888<br>0.790<br>0.760<br>0.705<br>0.630<br>0.583<br>0.584<br>0.507<br>0.456<br>0.410<br>0.370<br>0.335<br>0.303<br>0.275<br>0.250<br>0.227 0.207<br>0.178<br>0.150<br>0.189<br>0.133<br>Period 6<br>Period 7 0.871<br>0.665<br>0.513<br>0.452<br>0.400<br>0.354<br>0.314<br>0.279<br>0.240<br>0.204<br>0.222<br>0.198<br>0.143<br>0.095<br>Period 7<br>Period 8 0.853<br>0.731<br>0.627<br>0.540<br>0.487<br>0.404<br>0.351<br>0.305<br>0.266<br>0.233<br>0.179<br>0.157<br>0.139<br>0.123<br>0.004<br>0.108<br>0.068<br>Period 8<br>Period 9 0.837<br>0.703<br>0.592<br>0.500<br>0.424<br>0.361<br>0.308<br>0.263<br>0.225<br>0.194<br>0.167<br>0.144<br>0.125<br>0.108<br>0.082<br>0.048<br>Period 9<br>Period 10 0.820<br>0.676<br>0.558<br>0.463<br>0.386<br>0.322<br>0.270<br>0.227<br>0.191<br>0.182<br>0.137<br>0.118<br>0.099<br>0.085<br>0.073<br>0.082<br>0.035 Period 10<br>Period 11 0.804<br>0.650<br>0.527<br>0.429<br>0.350<br>0.287 0.237<br>0.195<br>0.162<br>0.135<br>0.112<br>0.094<br>0.079<br>0.066<br>0.058<br>0.047<br>0.025 Period 11<br>Period 12 0.788<br>0.625<br>0.497<br>0.397<br>0.319<br>0.257<br>0.208<br>0.168<br>0.137<br>0.112<br>0.092<br>0.076<br>0.062<br>0.052<br>0.043<br>0.036<br>0.018 Period 12<br>Period 13 0.773<br>0.601<br>0.489<br>0.368<br>0.200<br>0.220<br>0.182<br>0.145<br>0.116<br>0.093<br>0.075<br>0.061<br>0.050<br>0.040<br>0.033<br>0.027<br>0.013 Period 13<br>Period 14 0.758<br>0.577<br>0.442<br>0.340<br>0.263<br>0.205<br>0.180<br>0.125<br>0.009<br>0.078<br>0.062<br>0.049<br>0.039<br>0.032<br>0.025<br>0.021<br>0.009 Period 14<br>Period 15 0.743<br>0.555<br>0.417<br>0.315<br>0.239<br>0.183<br>0.140<br>0.108<br>0.084<br>0.005<br>0.051<br>0.040<br>0.031<br>0.025<br>0.020<br>0.018<br>0.008 Period 15<br>0.534<br>0.513<br>0.123<br>0.108<br>Period 16 0.728<br>0.394<br>0.292 0.218<br>0.163<br>0.093<br>0.071<br>0.054<br>0.042<br>0.032 0.025 0.019 0.015 0.012<br>0.005 Period 16<br>Period 17 0.714<br>0.371<br>0.270<br>0.198<br>0.146<br>0.080<br>0.000<br>0.045<br>0.034<br>0.026<br>0.020<br>0.015<br>0.012<br>0.009<br>0.003 Period 17<br>Period 18 0.700<br>0.494<br>0.350<br>0.250<br>0.180<br>0.130<br>0.095<br>0.009<br>0.051<br>0.038<br>0.028<br>0.021<br>0.016<br>0.012<br>0.009<br>0.007<br>0.002 Period 18<br>Period 19 0.686<br>0.475<br>0.331<br>0.232<br>0.184<br>0.118<br>0.043<br>0.083<br>0.073<br>0.064<br>0.060<br>0.031<br>0.023<br>0.017<br>0.012<br>0.009 0.007<br>0.005<br>0.002 Period 19<br>Period 20 0.673<br>0.456<br>0.312<br>0.215<br>0.140<br>0.104<br>0.051<br>0.037<br>0.020<br>0.010<br>0.014<br>0.010<br>0.008<br>0.007<br>0.005 0.004<br>0.001 Period 20<br>0.439<br>0.204<br>0.278<br>Period 21 0.80<br>0.199<br>0.135<br>0.022<br>0.003<br>0.083<br>0.044<br>0.031<br>0.015<br>0.011<br>0.006<br>0.004<br>0.003<br>0.001 Period 21<br>0.006<br>0.005<br>Period 22 0.647<br>0.422<br>0.184<br>0.123<br>0.056<br>0.038<br>0.026<br>0.018<br>0.013<br>0.009<br>0.004<br>0.003<br>0.002<br>0.002<br>0.001 Period 22<br>Period 23 0.634<br>0.406<br>0.262<br>0.170<br>0.112<br>0.074<br>0.049<br>0.033<br>0.022<br>0.015<br>0.010<br>0.007<br>0.003<br>0.002<br>0.000 Period 23<br>Period 24 0.622<br>0.390<br>0.247<br>0.158<br>0.102<br>0.066<br>0.043<br>0.028 0.019<br>0.013<br>0.008<br>0.006<br>0.004<br>0.003 0.002<br>0.001<br>0.000 Period 24<br>0.375<br>0.361<br>Period 25 0.610<br>0.233<br>0.148<br>0.002<br>0.050<br>0.038<br>0.024<br>0.018<br>0.014<br>0.010<br>0.007<br>0.005<br>0.003 0.002 0.001<br>0.001<br>0.000 Period 25<br>Period 26 0.598<br>0.220<br>0.135<br>0.084<br>0.053<br>0.033<br>0.021<br>0.000<br>0.006<br>0.004<br>0.002<br>0.002<br>0.001<br>0.001<br>0.000 Period 26<br>Period 27 0.586<br>0.347<br>0.207<br>0.125<br>0.076<br>0.047<br>0.020<br>0.018<br>0.011<br>0.007<br>0.005<br>0.003<br>0.002<br>0.001<br>0.001<br>0.001<br>0.000 Period 27<br>0.333<br>0.321<br>Period 28 0.574<br>0.190<br>0.116<br>0.060<br>0.042<br>0.026<br>0.016<br>0.010<br>0.006<br>0.004<br>0.002<br>0.002<br>0.001<br>0.001<br>0.000<br>0.000 Period 28<br>Period 29 0.563<br>0.185<br>0.107<br>0.063<br>0.037<br>0.022<br>0.000 Period 29<br>0.014<br>0.012<br>0.008<br>0.005<br>0.003<br>0.002<br>0.001<br>0.001<br>0.000<br>0.000<br>Period 30 0.552<br>0.000<br>0.068<br>0.033<br>0.007<br>0.004<br>0.002<br>0.308<br>0.174<br>0.057<br>0.020<br>0.003<br>0.002<br>0.001<br>0.001<br>0.000<br>0.000<br>0.000 Period 30<br>Period 35 0.500<br>0.253<br>0.130<br>0.038<br>0.019<br>0.010<br>0.008<br>0.003<br>0.001<br>0.001<br>0.000<br>0.000<br>0.000<br>0.000<br>0.000 Period 35<br>Period 40 0.453<br>0.208<br>0.097<br>0.048<br>0.022<br>0.011<br>0.005<br>0.003<br>0.001<br>0.001<br>0.000<br>0.000<br>0.000<br>0.000<br>0.000<br>0.000<br>0.000 Period 40<br>

Extracted text: Present Value of $1 Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 40% Periods Period 1 0.980 0.062 0.043 0.926 0.900 0.893 0.877 0.862 0.847 0.833 0.806 0.820 0.672 0.794 0.781 0.769 0.758 0.574 0.714 Period 1 0.502 0.455 Period 2 0.961 0.925 0.890 0.857 0.826 0.707 0.760 0.743 0.718 0.694 0.650 0.630 0.610 0.510 Period 2 Period 3 0.942 0.889 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.551 0.524 0.500 0.477 0.435 0.364 Period 3 Period 4 0.024 0.855 0.792 0.735 0.683 0.636 0.502 0.552 0.516 0.482 0.451 0.423 0.397 0.373 0.350 0.329 0.260 Period 4 Period 5 0.908 0.822 0.747 0.681 0.821 0.567 0.519 0.476 0.437 0.402 0.370 0.341 0.315 0.201 0.289 0.250 0.186 Period 5 Period 6 0.888 0.790 0.760 0.705 0.630 0.583 0.584 0.507 0.456 0.410 0.370 0.335 0.303 0.275 0.250 0.227 0.207 0.178 0.150 0.189 0.133 Period 6 Period 7 0.871 0.665 0.513 0.452 0.400 0.354 0.314 0.279 0.240 0.204 0.222 0.198 0.143 0.095 Period 7 Period 8 0.853 0.731 0.627 0.540 0.487 0.404 0.351 0.305 0.266 0.233 0.179 0.157 0.139 0.123 0.004 0.108 0.068 Period 8 Period 9 0.837 0.703 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 0.167 0.144 0.125 0.108 0.082 0.048 Period 9 Period 10 0.820 0.676 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.182 0.137 0.118 0.099 0.085 0.073 0.082 0.035 Period 10 Period 11 0.804 0.650 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 0.112 0.094 0.079 0.066 0.058 0.047 0.025 Period 11 Period 12 0.788 0.625 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 0.092 0.076 0.062 0.052 0.043 0.036 0.018 Period 12 Period 13 0.773 0.601 0.489 0.368 0.200 0.220 0.182 0.145 0.116 0.093 0.075 0.061 0.050 0.040 0.033 0.027 0.013 Period 13 Period 14 0.758 0.577 0.442 0.340 0.263 0.205 0.180 0.125 0.009 0.078 0.062 0.049 0.039 0.032 0.025 0.021 0.009 Period 14 Period 15 0.743 0.555 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.005 0.051 0.040 0.031 0.025 0.020 0.018 0.008 Period 15 0.534 0.513 0.123 0.108 Period 16 0.728 0.394 0.292 0.218 0.163 0.093 0.071 0.054 0.042 0.032 0.025 0.019 0.015 0.012 0.005 Period 16 Period 17 0.714 0.371 0.270 0.198 0.146 0.080 0.000 0.045 0.034 0.026 0.020 0.015 0.012 0.009 0.003 Period 17 Period 18 0.700 0.494 0.350 0.250 0.180 0.130 0.095 0.009 0.051 0.038 0.028 0.021 0.016 0.012 0.009 0.007 0.002 Period 18 Period 19 0.686 0.475 0.331 0.232 0.184 0.118 0.043 0.083 0.073 0.064 0.060 0.031 0.023 0.017 0.012 0.009 0.007 0.005 0.002 Period 19 Period 20 0.673 0.456 0.312 0.215 0.140 0.104 0.051 0.037 0.020 0.010 0.014 0.010 0.008 0.007 0.005 0.004 0.001 Period 20 0.439 0.204 0.278 Period 21 0.80 0.199 0.135 0.022 0.003 0.083 0.044 0.031 0.015 0.011 0.006 0.004 0.003 0.001 Period 21 0.006 0.005 Period 22 0.647 0.422 0.184 0.123 0.056 0.038 0.026 0.018 0.013 0.009 0.004 0.003 0.002 0.002 0.001 Period 22 Period 23 0.634 0.406 0.262 0.170 0.112 0.074 0.049 0.033 0.022 0.015 0.010 0.007 0.003 0.002 0.000 Period 23 Period 24 0.622 0.390 0.247 0.158 0.102 0.066 0.043 0.028 0.019 0.013 0.008 0.006 0.004 0.003 0.002 0.001 0.000 Period 24 0.375 0.361 Period 25 0.610 0.233 0.148 0.002 0.050 0.038 0.024 0.018 0.014 0.010 0.007 0.005 0.003 0.002 0.001 0.001 0.000 Period 25 Period 26 0.598 0.220 0.135 0.084 0.053 0.033 0.021 0.000 0.006 0.004 0.002 0.002 0.001 0.001 0.000 Period 26 Period 27 0.586 0.347 0.207 0.125 0.076 0.047 0.020 0.018 0.011 0.007 0.005 0.003 0.002 0.001 0.001 0.001 0.000 Period 27 0.333 0.321 Period 28 0.574 0.190 0.116 0.060 0.042 0.026 0.016 0.010 0.006 0.004 0.002 0.002 0.001 0.001 0.000 0.000 Period 28 Period 29 0.563 0.185 0.107 0.063 0.037 0.022 0.000 Period 29 0.014 0.012 0.008 0.005 0.003 0.002 0.001 0.001 0.000 0.000 Period 30 0.552 0.000 0.068 0.033 0.007 0.004 0.002 0.308 0.174 0.057 0.020 0.003 0.002 0.001 0.001 0.000 0.000 0.000 Period 30 Period 35 0.500 0.253 0.130 0.038 0.019 0.010 0.008 0.003 0.001 0.001 0.000 0.000 0.000 0.000 0.000 Period 35 Period 40 0.453 0.208 0.097 0.048 0.022 0.011 0.005 0.003 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Period 40
Present Value of Annuity of $1.00 in Arrears

Extracted text: Present Value of Annuity of $1.00 in Arrears" Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 22% 20% 0.833 24% 26% 28% 30% 32% 40% Periods Period 1 0.980 0.062 0.043 0.026 0.009 0.893 0.877 0.862 0.847 0.820 0.808 0.794 0.781 0.769 0.758 0.714 Period 1 Period 2 1.942 1.886 1.833 1.783 1.736 1.890 1.647 1.605 1.566 1.528 1.402 1.457 1.424 1.392 1.361 1.331 1.224 Period 2 Period 3 2.884 2.775 2.673 2.577 2.487 2.402 2.322 2.246 2.174 2.108 2.042 1.981 1.923 1.868 1.816 1.768 1.589 Period 3 Period 4 3.808 3.630 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 2.494 2.404 2.320 2.241 2.168 2.096 1.849 Period 4 Period 5 4.713 4.452 4.212 3.903 3.791 3.805 3.433 3.274 3.127 2.991 2.864 2.745 2.635 2.532 2.759 2.436 2.345 2.035 Period 5 Period 6 5.601 5.242 4.017 4.623 4.355 4.111 3.889 3.685 3.498 3.326 3.167 3.020 2.885 2.643 2.534 2.188 Period 6 Period 7 6.472 6.002 5.582 5.208 4.868 4.564 4.288 4.039 3.812 3.605 3.416 3.242 3.083 2.937 2.802 2.677 2.283 Period 7 Period 8 7.325 6.733 6.210 5.747 5.335 4.08 4.630 4.344 4.078 3.837 3.619 3.421 3.241 3.076 2.025 2.786 2.331 Period 8 Period 9 8.162 7.435 6.802 6.247 5.759 5.328 4.940 4.607 4.303 4.031 3.786 3.566 3.366 3.184 3.019 2.868 2.379 Period 9 6.145 6.405 Period 10 8.983 8.111 7.360 6.710 5.650 5.216 4.833 4.494 4.192 3.923 3.682 3.776 3.465 3.269 3.092 2.930 2.414 Period 10 Period 11 9.787 8.760 7.887 7.139 5.938 5.453 5.029 4.656 4.327 4.035 3.543 3.335 3.147 2.978 2.438 Period 11 Period 12 10.575 9.385 8.384 7.536 6.814 6.194 5.680 5.197 4.793 4.439 4.127 3.851 3.606 3.387 3.190 3.013 2.456 Period 12 Period 13 11.348 9.086 8.853 7.904 7.103 6.424 5.842 5.342 4.910 4.533 4.203 3.912 3.656 3.427 3.223 3.040 2.469 Period 13 Period 14 12.106 10.563 9.295 8.244 7.367 6.628 6.002 5.468 5.008 4.611 4.265 3.962 3.695 3.459 3.249 3.061 2.478 Period 14 Period 15 12.849 11.118 9.712 8.559 7.606 6.811 6.142 5.575 5.002 4.675 4.315 4.001 3.726 3.751 3.483 3.268 3.076 2.484 Period 15 Period 16 13.578 11.652 10.106 8.851 7.824 6.974 6.265 5.668 5.162 4.730 4.357 4.033 3.503 3.283 3.088 2.489 Period 16 Period 17 14.292 12.166 10.477 9.122 8.022 7.120 6.373 5.749 5.222 4.775 4.391 4.059 3.771 3.518 3.295 3.097 2.492 Period 17 Period 18 14.992 12.659 10.828 9.372 8.201 5.818 4.812 3.786 7.250 7.366 6.487 5.273 4.419 4.080 3.529 3.304 3.104 2.494 Period 18 Period 19 15.678 13.134 11.158 9.604 8.365 6.550 5.877 5.316 4.843 4.442 4.097 3.700 3.539 3.311 3.100 2.496 Period 19 4.460 4.476 Period 20 18.351 13.590 11.470 9.818 8.514 7.489 6.623 5.929 5.353 4.870 4.110 3.808 3.546 3.316 3.113 2.497 Period 20 Period 21 17.011 14.029 11.764 10.017 8.649 7.562 6.687 5.973 5.384 3.110 4.801 4.900 4.121 3.816 3.551 3.320 2.498 Period 21 Period 22 17.658 14.451 12.042 10.201 8.772 7.645 6.743 6.011 5.410 4.488 4.130 3.822 3.556 3.323 3.118 2.498 Period 22 Period 23 18.292 14.857 12.303 10.371 8.883 7.718 6.792 6.044 5.432 4.925 4.499 4.137 3.827 3.559 3.325 3.120 2.499 Period 23 Period 24 18.914 15.247 12.550 10.529 8.085 7.784 6.073 4.937 4.507 6.835 6.873 5.451 4.143 3.831 3.562 3.327 3.121 2.499 Period 24 Period 25 19.523 15.622 12.783 10.675 9.077 7.843 6.097 5.467 4.948 4.514 4.147 3.834 3.564 3.329 3.122 2.499 Period 25 Period 26 20.121 15.983 13.003 10.810 9.161 7.896 6.906 6.118 5.480 4.958 4.520 4.151 3.837 3.566 3.330 3.123 2.500 Period 26 Period 27 20.707 18.330 13.211 10.935 9.237 7.943 6.935 6.136 5.492 4.984 4.524 4.154 3.839 3.567 3.331 3.123 2.500 Period 27 Period 28 21.281 18.603 13.406 11.051 9.307 7.984 6.961 6.152 5.502 4.970 4.528 4.157 3.840 3.568 3.331 3.124 2.500 Period 28 Period 29 21.844 16.984 13.591 11.158 9.370 8.022 6.983 6.166 5.510 4.975 4.531 4.159 3.841 3.569 3.332 3.124 2.500 Period 29 7.003 7.070 Period 30 22.396 17.292 13.765 11.258 9.427 8.055 6.177 5.517 4.979 4.534 4.160 3.842 3.569 3.332 3.124 2.500 Period 30 Period 35 24.999 18.665 14.498 11.655 9.644 8.176 6.215 5.539 4.902 4.541 4.164 3.845 3.571 3.333 3.125 2.500 Period 35 Period 40 27.355 19.793 15.046 11.925 9.779 8.244 7.105 6.233 5.548 4.997 4.544 4.186 3.846 3.571 3.333 3.125 2.500 Period 40 * Payments (or receipts) at the end of each period.

Jun 11, 2022
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