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1 M6 Project 1: Capital Budgeting Project Analysis Task: Senior management asks you to recommend a decision on which project(s) to accept based on the cash flow forecast provided Relevant information: 1. The firm uses a 3-year cutoff when using the payback method. 2. The hurdle rate used to evaluate capital budgeting projects is 15%. The cash flows for projects A, B and C are provided below. Project A Project B Project C Year 0 -30,000 -20.000 -50,000 Year 1 0 4,000 20,000 Year 2 7,000 5,000 20,000 Year 3 20,000 6,000 20,000 Year 4 20.000 7.000 5,000 Year 5 10.000 8,000 5,000 5,000 9.000 5.000 Year 6 MacBook Air DU 20 888 F4 25 FS 17 13 WO # $ & % 5 3 4 6 7 8 9 O W E R T Y U 1 0 Year 5 10,000 8,000 5,000 Year 6 5.000 9,000 5.000 1. Assume the projects are independent and answer the following: . Calculate the payback period for each project. Which project(s) would you accept based on the payback criterion? Calculate the internal rate of return (IRR) for each project. Which projects would you accept based on the IRR criterion? Calculate the net present value (NPV) for each project. Which projects would you accept based on the NPV criterion? 2. Assume the projects are mutually exclusive and answer the following: Which project(s) would you accept based on the payback criterion? Which projects would you accept based on the IRR criterion? . Which projects would you accept based on the NPV criterion? Submission Instructions: Complete and submit the assignment by 23:59 Sunday. . You should submit your completed work in a Word document or Excel spreadsheet if needed. Grading Rubric Your assignment will be graded according to the following: Question 1: 60 points, 10 points each part. Question 2: 40 points, 13 points for part 1 and 2, 14 points for part 3