41 Capital Budgeting Exercises: Three independent projects are under consideration for capital budgeting purposes. Their respective initial investment, cost of capital, and cash flows are provided below. Use the following capital budgeting techniques to evaluate all three projects and indicate which project should be undertaken, assuming there is no budget constraint Payback period method Discounted payback period method Net present value method IRR method A. . C. D. Project 1 Project 2 Project 3 Initial $120,000 $130,000 $150,000 Investment Cost of Capital Target payback eriod 9% 10 % 7% 4 years 4 years 4 years Cash flows $33,000 31Poo 33,000 000 33,000 ,000 30,000 129,000 30,000 4000 $30,000 ,000 Go poo Year 1 $35,000 35,000 45,000 45,000 45,000 Year 2 30,000 40 000 Year Year 4 Year 5 30.000 35,000 as,000 35,000 60,00D A)PN= Capital Budgeting Spreadsheet Example ASSIGNMENT# 34.00 3t 35,000 NAME: > payback period LAB TIME: Answer Sheet for Capital Budgeting Exercises From Previous Page Project I Project 2 Which project(s) should be accepted? Project 3 Payback period Discounted payback period NPV IRR NPV= 2LL 4 4+.95-4.85