Homework: 7-1 MyAccountingLab Homework: Chapter 21 Save Score: 1.2 of 9 pts 4 of 5 (1 complete) HW Score: 2.67%, 1.2 of 45 pts E21-27 (similar to) Question Help Fitzgibbons Construction is analyzing ils capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Lori Bryce, staff analyst at Fitzgibbons, is preparing an analysis of the three projects under consideration by Chester Fitzgibbons, the company's owner. (Click the icon to view the data for the three projects.) Pres Data Table Read i Requirements Req! ital bud A B D 1. a. W Project A Project B Project C Bend a. 2 Projected cash outflow Because the company's cash is limited, Fitzgibbons thinks the payback method should be used to choose between the capital budgeting projects. a What are the benefits and limitations of using the payback method to choose between projects? b. Calculate the payback period for each of the three projects. Ignore Income taxes. Using the payback method, which projects should Fitzgibbons choose? 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. Which projects, if any, would you recommend funding? Briefly explain why. 3 Net initial Investment $ 6,000,000 $ 4,000,000 $ 8,000,000 OE 2. 4 Projected cash inflows 5 Year 1 3. 6 Year 2 7 Year 3 $ 2,050,000 $ 1,100,000 $ 4.700,000 2,050,000 2,300,000 4,700.000 2,050,000 700.000 50,000 2,050,000 25,000 6% 6% 6% Limit Print Done 8 Year 4 TO DO 9000 or prooo Warrangerer porno ocrom - L... ... ... -- --.---........................ .................. -- --... ... ..... 9 Required rate of return Enter any number in the edit fields and then click Check Answer. Print Done 7 parts