Construction Corp is assessing two projects, Project Build1 and Project Build2 The cash flows for these projects are Year Project Build1 Project Build2 0 $(500) $(450) 1 150 130 2 180 160 3 210 190 4 240 220 The discount rate is 14 Analyze the following a Calculate the payback period for each project b Determine the NPV for both projects c Compute the IRR for each project d Evaluate which project has a better payback period e Provide a strategic recommendation based on financial analysis FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscript Font Family Arial Georgia Impact Tahoma Times New Roman Verdana Font Size 8 9 10 11 12 14 18 24 30 36 48 60 72 96 Inline Style Big Red Small Blue Paragraph Style Gray Bordered Spaced Uppercase Paragraph Format Normal Heading 1 Heading 2 Heading 3 Heading 4 Code Align Align Left Align Center Align Right Align Justify Ordered ListUnordered ListDecrease IndentIncrease Indent Insert ImageInsert TableSpecial CharactersInsert Horizontal LineSelect AllClear Formatting UndoRedo Clear Formatting Selected Clear Formatting Unlicensed copy of the Froala Editor Use it legally by purchasing a license A company is considering the purchase of a new equipment with a capital cost of Rs 4,50,000 The equipment has a useful life of 7 years and no salvage value at the end The equipment is expected to generate annual net operating income after depreciation of Rs 85,000 The company's tax rate is 40 The present value factors for 7 years are given below Present Value Factors Discounting Rate Cumulative Factor 10 4 87 12 4 56 14 4 29 16 4 04 18 3 82 Requirements Calculate the annual net cash inflow after tax Determine the present value of the cash inflows at each discount rate Calculate the net present value (NPV) at each discount rate Find the internal rate of return (IRR) of the proposal Decide if the equipment should be purchased if the company's required rate of return is 12

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Construction Corp is assessing two projects, Project Build1 and Project Build2. The cash flows for these projects are: Year Project Build1 Project Build2 0 $(500)

Construction Corp is assessing two projects, Project Build1 and Project Build2. The cash flows for these projects are:

Year	Project Build1	Project Build2
0	$(500)	$(450)
1	150	130
2	180	160
3	210	190
4	240	220

The discount rate is 14%. Analyze the following:

a. Calculate the payback period for each project. b. Determine the NPV for both projects. c. Compute the IRR for each project. d. Evaluate which project has a better payback period. e. Provide a strategic recommendation based on financial analysis.

FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscript
Font FamilyFont SizeInline StyleParagraph Style
Paragraph FormatAlignOrdered ListUnordered ListDecrease IndentIncrease Indent
Insert ImageInsert TableΩSpecial CharactersInsert Horizontal LineSelect AllClear Formatting
UndoRedo
????????Clear Formatting
????Selected Clear Formatting

Unlicensed copy of the Froala Editor. Use it legally by purchasing a license.

A company is considering the purchase of a new equipment with a capital cost of Rs. 4,50,000. The equipment has a useful life of 7 years and no salvage value at the end. The equipment is expected to generate annual net operating income after depreciation of Rs. 85,000. The company's tax rate is 40%. The present value factors for 7 years are given below:

Present Value Factors:

Discounting Rate	Cumulative Factor
10%	4.87
12%	4.56
14%	4.29
16%	4.04
18%	3.82

Requirements:

Calculate the annual net cash inflow after tax.
Determine the present value of the cash inflows at each discount rate.
Calculate the net present value (NPV) at each discount rate.
Find the internal rate of return (IRR) of the proposal.
Decide if the equipment should be purchased if the company's required rate of return is 12%.