Instructions: week. 1. The assessment must be submitted before the end of the 2 Late submission will result in a reduction of 5% as per institutional policy Case study: Capital Budgeting Al-Teqaniyah Tool, a large machine shop, plans to replace one of its lathes with either two new lathes the A or the B lath. Lathe A is a highly digital, computer-controlled lathe; lathe B less costly using standard technology. To evaluate these alternatives, financial analyst Abdullah Hamdan prepared estimates of initial investment and cumulative (relevant) cash inflows associated with each lathe. The following table shows these. Lathe late B Initial investment (CF35660,000 $360,000 Year( Cash inflows (CF) 1 S128,000 S 88.000 2 182.000 120,000 3 166.000.000 168.000 86.000 450,000 207.000 Note that Abdullah plans to analyze both lathes over a 5-year period. At the end of that time, the lathes would be sold, thus accounting for the large fifth year cash inflows. Abdullah believes that the two lathes are equally risky and that the acceptance of either of them will not change the firm's overall risk. He therefore decides to apply the firm's 13% cost of capital when analyzing the lathes. Norwich Tool requires all projects to have a maximum payback period of 4.0 years. b. Required: Use the payback period to assess the acceptability and relative ranking of cach lathe. Assuming oqual risk, use the following sophisticated capital budgeting techniques to assess the acceptability and relative ranking of each lathe: 1) Net present value (NPV). 2) Internal rate of return (IRR). Summarize the preferences indicated by the techniques used in parts a and b. Do the projects have conflicting rankings? Use your findings in parts a through d to indicate, on both (1) a theoretical and (2) a practical basis, which lathe would be preferred. Explain any recommendations e. difference in