Harington Co. is an established construction company and has been in operation for 50 years. It specializes in building warehouses for companies and their supply chains. With the covid pandemic almost over, Harington Co. has received offers to build warehouses for businesses that intend to expand. Below are two offers they have received to build warehouses, However, since the pandemic has affected Harington's business over the past year, the company can undertake only one of the offers. Warehouse for Amazon Sweden: Initial outflow: 420,000 SEK Year Cash inflow (in SEK) 100,000 200,000 3 300,000 400,000 1 2 4 Warehouse for H&M: Initial outflow: 760,000 SEK Year 1 2 3 4 Cash inflow (in SEK) 400,000 300,000 200,000 100,000 Harington Co. has a cost of capital of 12%. All cash flows occur at the end of each year. The present value tables are attached to this question as a PDF document. Formulas for capital investment: FV. = V. (1 + k)" PV = FV,/(1+K) + FV,/(1+)2 + ...... Present value of 1 after N years = 1/(1+k)" Present value of an Annuity of 1 received annually for N years = (1/k) 1 - (1/(1+k)")) Required (show all your calculations below and write in your own words): (a) Calculate the Net Present Value (NPV) for both warehouses. (4 points) (b) Calculate the payback period for both warehouses (2 points) (c) Which warehouse should Harington Co. bulld? (1 point) (d) Explain in full two (2) non-financial factors Harington Co. should consider before making the above decision. (3 points) Fill in your answer below clearly indicating (a), (b), (c) and (d): 3 Help the APPENDIX A PRESENT VALUE OF 1 AFTER N YEARS = 5.3/(1+5)* the rable Years 10 1 2 3 0.899 0.799 0.712 + 5 6 7 0.26 0.751 0.63 21 0.564 3.513 0.47 0.414 0.636 3.567 0507 090 0936 . 8.859 50 0.994 0.792 0.755 0.747 0.661 0.705 0.630 0.663 067 0.592 050 0.550 0.463 2.522 1497 1.397 0453 0.62 0.743 0641 0.552 0476 0.410 0354 0305 0.263 0.227 0.769 0.675 0.542 0319 0.456 0.400 0.351 0.305 0.270 0.239 0.990 0.90 . 0.980 0.961 925 0.971 0961 092 0.855 0951 0.833 0.942 . 0.790 0933 0871 0.76 0.923 0.85 6.71 0.914 02 0.703 0.505 0.8.20 0676 . 0.804 0.650 0.887 0.78 0125 0.87 0.975 6601 0.70 075 0577 0.61 0743 0.355 0853 0.728 0334 0.544 0.714 0513 0.836 0.700 0.494 0.628 0.686 0.478 0.220 0.67) LYSO 0150 thie 0386 0.350 0.319 0200 0:30 0.820 0.256 0658 0.572 0497 0413 0.76 0.127 0.284 0.247 0215 OK 0.16 0141 0123 0.109 0193 0.01 6070 M1 9 10 11 12 13 14 15 16 13 18 19 20 5610 1910 0145 0.000 361 0.392 0,27 0.359 0.229 0.205 183 0.163 0.146 0.130 116 040 0.417 094 0371 0350 15 0.30 0313 0292 0290 0250 0232 1.215 0.239 0.218 3.198 10 0.164 Q.10 0.183 0.160 0.140 0.125 0.106 0.095 ORD . 0.103 0.093 0.080 0.0 016 OS CICO 104 Town hener 1 2016 58 205 2 os 35 al lowable tal 0.71 BBC 0718 0.601 > 0.435 0.694 . 0.482 0402 0800 0.640 0.512 410 79 0630 0.500 0.397 0315 0.250 0.198 DIN 0:47 0.373 3 0439 0320 0.392 1458 0390 0.269 0.207 150 7 # 10 0.30 0325 25 0.306 060 0.524 02 0341 0.275 0.312 0.179 0.144 0.116 0.994 0.276 0.062 0.040 01040 0.032 had 6 0.279 0.23 0.196 0.362 0.335 0.112 0693 0.00 0830 0672 0.531 6451 0.570 03 29 0204 0167 0.137 0112 0092 0.0175 0.062 0051 0.00 4094 0.028 0.227 0.178 0.139 Q.108 0.005 0.666 10 11 12 HOR 0.262 0.210 0.101 0114 0.102 0086 0.00 0.055 0.044 033 2.62 0.162 0.137 07 0.549 0.06 0.30 0.223 0.165 0.122 0.01 0.00 0.050 0.037 0.007 0.020 0.015 0.011 0.000 0.006 0.005 0.003 0.002 0.099 0.079 0062 GOS 0039 DO 0.013 0.056 0043 0033 00 0.015 14 15 36 17 28 19 20 01.09 0.04 0.071 0.060 0.05 0.00 003 0.054 0.045 0.08 0.025 0.020 0.040 0.032 0.025 0.019 0.015 0.012 0.000 0.007 BOLS 0.012 0.01 0.021 0.017 0014 6018 0014 3.6.26 0.012 0.010 000 0.005 100
