This for my Managerial Accounting Course kindly Type in order for me to Copy and Paste

1 McGloire 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. Lori Alleyne, staff analyst at McGloires, is preparing an analysis of the three projects under consideration by Joyanne McGloire, the companys owner.

	A	B	C	D
01		Project A	Project B	Project C
02	Projected Cash Outflow
03	Net Initial Investment	$3,000,000	$1,500,000	$4,000,000
04
05	Projected Cash Inflows
06	Year 1	$1,000,000	$400,000	$2,000,000
07	Year 2	$1,000,000	$900,000	$2,000,000
08	Year 3	$1,000,000	$800,000	$ 200,000
09	Year 4	$1,000,000		$ 100,000
10
11	Required Rate of Return	10%	10%	10%

1. Because the companys cash is limited, McGloire thinks the payback method should be used to choose between the capital budgeting projects.

a. List two benefits and two limitations of using the payback method to choose between projects? (2 marks)

b. Calculate the payback period for each of the three projects (4 marks).Ignore income taxes. Using the payback method, which projects should McGloire choose and why? (2 mark)

2. Alleyne 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. (6 marks)

3. Using both Payback and NPV results, which projects, if any, would you recommend McGloire should fund? Justify your answer and include a critical assessment of two nonfinancial

qualitative factors that could affect the investment. (4 marks)