Part 5 - Capital Budgeting Analysis (15 marks) Assume the following data for a proposed investment in new equipment by a company. The company has the goals set out below before it will accept the project. The cash flows include variable labour costs and relates to a new business for the company. It is expected that the business will last 5 years, and employees would be transferred to other divisions after the five years at the same manufacturing location and use their acquired skills to keep the general business growing. Employees will have to be recruited. The company reports profits to investors annually and the investors want a positive net present value, payback of less than 7 years and an average accounting return of 30%. Questions: 1. What is an important strategic consideration in making the above decision? (1 mark) 2. Use quantitative analysis to assess whether the company should accept the project (yes or no) respecting the desires of investors and the board. (12 marks) a. Net present value method b. Payback method c. Average accounting return 3. What is one advantage and one disadvantage of the net present value method? (2 mark)