CAPITAL BUDGETING ANALYSIS

CASH FLOWS OVER THE PROJECT'S LIFE
		Net Cash Flows At End of Year
Year Number		0	1	2	3	4
YEAR		2016	2017	2018	2019	2020
CAPITAL PROJECT 1		-$2,255,000	$721,400	$801,800	$593,100	$1,136,000
CAPITAL PROJECT 2		-$3,265,964	$926,208	$927,125	$821,196	$2,139,306
CAPITAL PROJECT 3		-$1,743,541	$338,026	$438,825	$707,028	$1,213,703
CAPITAL PROJECT 4		-$3,567,558	$804,269	$919,913	$1,335,775	$1,958,653
Target Rate of Return		14.375%

CAPITAL BUDGETING CALCULATIONS & EVALUATION
Project Evaluations
Calculate		Net Present Value (NPV)	Internal Rate of Return (IRR)	Profitability Index (PI)	Payback Period	Discounted Payback Period
CAPITAL PROJECT 1		$0	0.0%	0.000	0.00	0.00
CAPITAL PROJECT 2		$0	0.0%	0.000	0.00	0.00
CAPITAL PROJECT 3		$0	0.0%	0.000	0.00	0.00
CAPITAL PROJECT 4		$0	0.0%	0.000	0.00	0.00

a) Identify all project combinations that are acceptable for Amaron Products based on the NPV acceptance criterion.
POSSIBLE PROJECT COMBINATIONS examples: (#5 & #7 & #8) or (#5 & #7)		Combined Project Cash Flows At End of Year
		Project Cost 2016	2017	2018	2019	2020	NET PRESENT VALUE (NPV)
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b) From the list of Acceptable Project Combinations you identified in part (a) above select the project combinations that have a combined project cost less than the Restricted Capital Budget of $5,235,700.
POSSIBLE PROJECT COMBINATIONS examples: (#5 & #7 & #8) or (#5 & #7)		Combined Project Cash Flows At End of Year
		Project Cost 2016	2017	2018	2019	2020	NET PRESENT VALUE (NPV)
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c) Which ONE of these project combinations identified in part (b) above will MAXIMIZE the corporate value of Amaron Products?
PROJECT COMBINATION THAT WILL MAXIMIZE THE CORPORATE OF AMARAON PRODUCTS.		Combined Project Cash Flows At End of Year
		Project Cost 2016	2017	2018	2019	2020	NET PRESENT VALUE (NPV)
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