Question No. 3 Atlas Engineering is planning to install new machinery in their manufacturing division. The...

Question No. 3

Atlas Engineering is planning to install new machinery in their manufacturing division. The total investment budget is $120000. Atlas Engineering is reviewing three machinery that will generate three different cash inflow with the similar investment. For comparison and optimal capital budgeting decision, company require to analyze three project options with the following cash inflows.

Year	Project A Inflow	Project B Inflow	Project C Inflow
1	$29,064	$31,970	$34,877
2	33,960	$37,356	$40,752
3	30,600	$33,660	$36,720
4	17,400	$19,140	$20,880
5	15,672	$17,239	$18,806
6	15,672	$17,239	$18,806
7	15,672	$17,239	$18,806
8	13,560	$14,916	$16,272
9	11,400	$12,540	$13,680
10	11,400	$12,540	$13,680

you are required to use Net Present Value (NPV) technique to compare three projects for Atlas Engineering capital budgeting and finally advise them to select or reject any one project among them. Rate of return assume to be 12% annually.

Further give clear decision on what bases project is accepted and others are rejected?

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Expert Solution

ekkarill92 answered 1 year ago

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