Hafners Construction is analyzing its capital expenditure proposals for the purchase of equipment in the...
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Accounting
Hafners Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $15,000,000 for the year. Lauren Bobo,staff analyst at Hafners, is preparing an analysis of the three projects under consideration by Caden Hafners, the company's owner.
Project A
Project B
Project C
Projected cash outflow
Net initial investment
$6,600,000
$8,500,000
$9,000,000
Projected cash inflows
Year 1
$3,600,000
$5,500,000
$4,900,000
Year 2
3,600,000
2,000,000
4,900,000
Year 3
3,600,000
1,100,000
200,000
Year 4
3,600,000
100,000
Required rate of return
6%
6%
6%
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