Cranes Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $10,000,000 for the year. Lenora Bobo, staff analyst at Cranes, is preparing an analysis of the three projects under consideration by Casey Cranes, the company's owner. E (Click the icon to view the data for the three projects.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirements Data table Requirement 1. Becaus a. What are the benefits Because the company's cash is limited, Cranes thinks the payback method B C D Benefits of the payback pay should be used to choose between the capital budgeting projects. . . % v | 1 Project A Project B Project C Indicates wheth a. What are the benefits and limitations of using the payback method to Projected cash outflow Net initial investment $ 5,100,000/ $ 5,000,000|$ 6,000,000 choose between projects? b. Calculate the payback period for each of the three projects. Ignore income v Easy to understg taxes. Using the payback method, which projects should Cranes choose? Bobo thinks that projects should be selected based on their NPVs. Assume all cash flows occur at the end of the year except for initial investment amounts. Calculate the NPV for each project. Ignore income taxes. Which projects, if any, would you recommend funding? Briefly explain why. Utilizes the time Projected cash inflows Year 1 $ 2,750,000|$ 3,200,000{$ 3,200,000 Year 2 2,750,000 1,400,000| 3,200,000 Year 3 2,750,000 1,200,000 250,000 Year 4 2,750,000 125,000 Required rate of return 8% 8% 8% Al of the above Limitations of the paybat Cannot be used . Fails to incorporg o [([N|o o [s|w|N Cannot be used Al of the above b. Calculate the paybacl T = 7 = 2 m Project A Project B Project C years