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2. Capital Budgeting Vernon Company has been offered an opportunity for investment as follows: The project requires an additional $10,000 (above cost of equipment) of
2. Capital Budgeting Vernon Company has been offered an opportunity for investment as follows: The project requires an additional $10,000 (above cost of equipment) of working capital. Cost of equipment needed $380,000 Annual Cash Receipts Year 1 $100,000 Year 2 100,000 Year 3 100,000 Year 4 100,000 Year 5 225,000 Salvage Value at end of 5 years 25,000 REQUIRED: a. Prepare a timeline for the above investment b. Determine the payback for this investment? Would be acceptable under the Payback method if a required payback period is three years? Used the net present value method for this investment if the discount rate is 14%. d. Determine the profitability index | e. Determine the internal rate of return. f. Should they make the investment? Explain your
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