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Adequate explanations please Harington Co. is an established construction company and has been in operation for 50 years. It specializes in building warehouses for companies

image text in transcribedAdequate explanations please

Harington Co. is an established construction company and has been in operation for 50 years. It specializes in building warehouses for companies and their supply chains. With the covid pandemic almost over, Harington Co. has received offers to build warehouses for businesses that intend to expand. Below are two offers they have received to build warehouses, However, since the pandemic has affected Harington's business over the past year, the company can undertake only one of the offers. Warehouse for Amazon Sweden: Initial outflow: 420,000 SEK Year Cash inflow (in SEK) 1 100,000 2 200,000 3 300,000 4 400,000 Warehouse for H&M: Initial outflow: 760,000 SEK Year 1 2 Cash inflow (in SEK) 400,000 300,000 200,000 100,000 3 4 Harington Co. has a cost of capital of 12%. All cash flows occur at the end of each year. The present value tables are attached to this question as a PDF document. Formulas for capital investment: FVn = V. (1 + K)" PV= FV1/(1+K) + FV2/(1+K)2 + Present value of 1 after N years = 1/(1+k)" Present value of an Annuity of 1 received annually for N years = (1/k)( 1 - (1/(1+k)")) Required (show all your calculations below and write in your own words): (a) Calculate the Net Present Value (NPV) for both warehouses. (4 points) (b) Calculate the payback period for both warehouses.(2 points) (c) Which warehouse should Harington Co. build? (1 point) (d) Explain in full two (2) non-financial factors Harington Co. should consider before making the above decision. (3 points)

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