projects under consideration by Corey Andrews, the company's owner. (Click the ioon to view the data for the three projects.) Read the requirements. Requirement 1. Because the company's cash is limited, Andrews 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? Benefits of the payback method: A. Utilizes the time value of money and computes each project's unique rate of retum B. Easy to understand and captures uncertainty about expected cash flows in later years of a project C. Indicates whether or not the project will earn the company's minimum required rate of return D. All of the above Limitations of the payback method: A. Cannot be used when management's required rate of return varies from one period to the next. B. Fails to incorporate the time value of money and does not consider a projects cash flows after the payback period C. Cannot be used for projects with unequal periodic cash flows D. All of the above Requirement 3. Which projects, if any, would you recommend funding? Briefly explain why. The method is generally regarded as the preferred method for project selection decisions, therefore, the company should consider investing in the project(s) with Since the company's is limited by th it can make during the year, if more than one project fits this criteria, they should choose the investment(s) with the Prior to making a final decision, the company should also consider the nonfinancial qualitative factors of the investments such as the Using only the NPV calculations from requirement 2, Andrews should invest in Requirements 1. Because the company's cash is limited, Andrews 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 Andrews choose? 2. Bart 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. 3. Which projects, if any, would you recommend funding? Briefly explain why. Reference Reference Reference Reference