☐ Group Case Study: Capital Budgeting Wise Age Care Home LLC is considering allocating a limited amount of capital investment funds among four proposals (independent living facility, assisted living facility, memory care facility, and retirement community facility). The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows: Proposal Investment Year Income from Total Cash Flows Operations from Assets (OCF) (CFFA) Proposal A living (Independent $540,000 42,000 150,000 facility) 1 $ 2 42,000 150,000 3 ISI 42,000 $ 150,000 4 $ (18,000) $ 90,000 5 $ (18,000) $ 90,000 $ 90,000 630,000 Proposal B (Assisted $250,000 50,000 100,000 living facility) 1 2 [$ 40,000 90,000 3 [$ 30,000 80,000 4 |$| 15,000 $ 65,000 5 $ 15,000 $ 65,000 150,000 400,000 Proposal C (Memory $640,000 92,000 220,000 Care facility) 1 $ 2 $ 82,000 210,000 3 82,000 210,000 14 $ 62,000 190,000 5 $ 32,000 $ 160,000 350,000 990,000 Proposal D (Retirement $310,000 68,000 130,000 Community facility) 1 2 38,000 100,000 3 $ (2,000) 60,000 4 $ (2,000) $ 60,000 5 $ (2,000) 60,000 100,000 410,000 The company's capital budgeting policy requires a maximum cash payback period of 3 years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the Net Present Value (NPV) method and the Internal Rate of Return (IRR) methods are used to rank the remaining proposals. Instructions: Using Excel (your work should have clear input_page, calculation pages, and output pages), please complete the following: 1. Compute the cash Payback Period for each of the four proposals. Round to nearest month. 2. Compute the cash Discounted Payback Period of the four proposals. Round to nearest month. 3. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the Internal Rate of Return (IRR) for each of the four proposals. Round to two decimals place. 4. Using the following format, summarize the results of your computations in parts (1), (2), and (3). By placing a check mark in the appropriate column at the right, indicate which proposals should be accepted for further analysis and which should be rejected. Proposal Payback Period Discounted Payback Period Internal Rate of Return Accept for Further OR Reject Analysis A B C D 5. For the proposals accepted for further analysis in part (4), compute the Net Present Value (NPV). Use a rate of 12%. Round to the nearest dollar. 6. Rank the proposals from most attractive to least attractive, based on the Internal Rate of Return (IRR) computed in part (3). 7. Rank the proposals from most attractive to least attractive, based on the Net Present Value (NPV) computed in part (5). 8. Based upon the analyses done above, comment on the relative attractiveness of the proposals ranked in parts (6) and (7). Which provides the most useful results. 9. If you were making the investment decision, show how you would rank the proposals, and by what method you made your decision. 10. What other non-financial factors would you consider?