Which of the following should be included in the capital budgeting process? Check all that apply.

A$.$ Considering expansion projects over replacement projects.

B$.$ Computing the present value of the expected cash flows.

C$.$ Comparing the present value of the cash flows with the initial investment, or cost$,$ required to acquire the asset.

D$.$ Computing the accounting rate of return.

The net present value $($NPV$)$ and internal rate of return $($IRR$)$ methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions.

Green Caterpillar Garden Supplies Inc. lost a portion of its planning and financial data when its server and its backup server crashed. The company$$s CFO remembers that the internal rate of return $($IRR$)$ of Project Lambda is $14\mathrm{.}60\%,$ but he can$$t recall how much Green Caterpillar originally invested in the project nor the project$$s net present value $($NPV$).$ However, he found a note that contained the annual net cash flows expected to be generated by Project Lambda. They are:

Year

Cash Flow

$1$ $$1,600,000$

$2$ $$3,000,000$

$3$ $$3,000,000$

$4$ $$3,000,000$

The CFO has asked you to compute Project Lambda$$s initial investment using the information currently available to you. He has offered the following suggestions and observations:

$$ A project$$s IRR represents the return the project would generate when its NPV is zero or the discounted value of its cash inflows equals the discounted value of its cash outflows$$when the cash flows are discounted using the project$$s IRR.

$$ The level of risk exhibited by Project Lambda is the same as that exhibited by the company$$s average project, which means that Project Lambda$$s net cash flows can be discounted using Green Caterpillar$$s $10\mathrm{.}00\%$ desired rate of return.

Given the data and hints, Project Lambda$$s initial investment is$\_\_\_\_\_,$ and its NPV is $\_\_\_\_($both rounded to the nearest whole dollar$).$