Fitzgibbons Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Lenora Bryce, staff analyst at Fitzgibbons, is preparing an analysis of the three projects under consideration by Caden Fitzgibbons, the company's owner.

2. Bryce 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.

3. Which projects, if any, would you recommend funding? Briefly explain why.

Project A Project B Project C Projected cash outflow Net initial investment6 Projected cash inflows Year 1 Year 2 Year 3 Year 4 $6,000,000 $4,000,000 $8,000,000 $ 2,050,000 1,100,000 $4,700,000 2,050,000 2,300,000 4,700,000 50,000 25,000 10% 2,050,000 2,050,000 10% 700,000 Required rate of retu 10%