. Integrate knowledge of capital investments, credit planning, and finance into relevant aspects of work.

R Company is considering replacing some of its equipment. The company analyzed the future cash flows and the expected costs for each piece of equipment and came up with three options. The options and the cost of financing each option is listed below: Option A Year Cash Flow Comment 2021 $ (1,500,000.00) Includes installation costs 2022 $ 350,000.00 2023 $ 450,000.00 2024 $ 150,000.00 2025 $ 600,000.00 2026 $ 150,000.00 2027 $ 150,000.00 2028 $ 75,000.00 2029 $ 600,000.00 Includes salvage value Cost of Financing 11

Year Cash Flow Comment 2021 $ (3,000,000.00) Includes installation costs 2022 $ 75,000.00 2023 $ 45,000.00 2024 $ 1,050,000.00 2025 $ 1,200,000.002026 $ 750,000.00 2027 $ 750,000.00 2028 $ 600,000.00 2029 $ 600,000.00 Includes salvage value Cost of Financing 12%

Year Cash Flow Comment 2021 $ (10,000,000.00) Includes installation costs 2022 $ 1,500,000.00 2023 $ 3,000,000.00 2024 $ 4,500,000.00 2025 $ 150,000.00 2026 $ 150,000.00 2027 $ 150,000.00 2028 $ 1,050,000.00 2029 $ 300,000.00 Includes salvage value Cost of Financing is 13% Your task is analyzing the three options, and deciding which option is the best. The companys only requirement is that payback period should not exceed 5 years. Your decision criteria should incorporate; NPV, IRR and payback period. In order to finance this project, the company has three options: Line of Credit Secured Loan Issuing debentures Which option should be selected and why (assume same cost of financing

Correct calculation of: NPV, IRR, and Payback (2%) Correct project selection (1%) Selecting the appropriate credit facility, and justifying the selection (2%)