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. Lisa Bickerson, staff analyst at Halls, is preparing an analysis of the thre consideration by Conan Halls, the company's owner. E (Click the icon to view the data for the three projects.) E (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) E(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 budgeting projects. Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.) O Data Table Project A years Project B years Project C years Project A Project B Project C Using the payback method, which project(s) should Halls choose? Projected cash outflow $ 3,000,000 $ 2,100,000 $ 3,000,000 Net initial investment Projected cash inflows $ 1,200,000 $ 1,200,000 $ 1,700,000 Year 1 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% Print Done
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. Lisa Bickerson, staff analyst at Halls, is preparing an analysis of the thre consideration by Conan Halls, the company's owner. E (Click the icon to view the data for the three projects.) E (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) E(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 budgeting projects. Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.) O Data Table Project A years Project B years Project C years Project A Project B Project C Using the payback method, which project(s) should Halls choose? Projected cash outflow $ 3,000,000 $ 2,100,000 $ 3,000,000 Net initial investment Projected cash inflows $ 1,200,000 $ 1,200,000 $ 1,700,000 Year 1 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% Print Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 to $5,000,000 for the year. Lisa Bickerson, staff analyst at Halls, is preparing an analysis of the three projects unde
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 budgeting projects.
Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.)
i
Data Table
Project A
years
Project B
years
Project C
years
Project A
Project B
Project C
Using the payback method, which project(s) should Halls choose?
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%
Print
Done
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