Romanos Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Lemon Babson, staff analyst at Romanos, is preparing an analysis of the three projects under consideration by Corey Romanos, the company's owner. (Click the icon to view the data for the three projects.) (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Present Value of $1 factors.) Read the requirements. (Click the icon to view the Future Value of Annuity of $1 factors.) (Click the icon to view the Present Value of Annuity of $1 factors.) Requirement 1. Because the company's cash is limited, Romanos thinks the payback method should be used to choose between the capital budgeting projects. Calculate the payback period for each of the three projects. Ignore income taxes. (Round your answers to two decimal places.) Project A years Project B years Project C years Using the payback method, which project(s) should Romanos choose? Romanos Construction is a projects under consideration (Click the icon to view (Click the icon to view (Click the icon to view Read the requirements. Data Table Projected cash outflow Net initial investment - X g year. The capital budget is limited to S Project A Project B Project C (Click the icon to view the Futs (Click the icon to view the Pre $ 3,000,000 $2,100,000 $3,000,000 o choose between the capital budgetings ecimal places.) Requirement 1. Because t Projected cash inflows Calculate the payback peric Year 1 $ 1,200,000 $ 1,200,000 $1,700,000 Project A ye Year 2 1,200,000 600,000 1,700,000 Project B ye Year 3 1,200,000 500,000 200,000 Project C ye Year 4 1,200,000 100,000 Using the payback method, Required rate of return 8% 8% 8% Print Done Requirements 1. 2. Because the company's cash is limited, Romanos 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 Romanos choose? Babson 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. Type here to search Print Done D X