CH 11 (Capital Budgeting) Capital budgeting practice (CAPEX) A company is introducing a product that can sell at: 50 USD per unit, it is estimated that the volume of sales to be made is 300,000 units the first year and for the following years an increase of 5% compared to the sales of the previous year, this during the useful life of the project, which is 4 years. The company has two investment alternatives. 1st. Project A, and 2nd. Project B. The cost distribution is as follows: Variable costs from A: 800,000 to B:400,000. The fixed costs for A: are 1,725,000 while for B : they are 1,850,000. Initial investment in project "A" is: 2,800,000 while for "B" it is: 3,400,000. Additional info: The investment will have a capital cost of 15% and the ISR is 27%. the depreciation method used is the straight line according to the categories in force in the DGII. It is required: a) Develop forecasted income statement with the data provided Then determine: b) Recovery Period or Pay Back c) Productivity Index d) Net Present Value (NPV) e) Develop capital investment budget (CAPEX) and select the most feasible project according to the indicators