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Were your recommendations the same for each method

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Question - ACME Company is evaluating whether to invest in two projects. ACME Co. has the funds to invest in both. The first project is a $250,000 investment in pollution abatement equipment. The cash savings from implementing this equipment will be $24,000 per year for 25 years. The second project is a robot that will stack the finished goods product on pallets for shipment. Currently, the product is being stacked manually. The robot will cost $1,000,000. The cash inflows for project 2 are Year 1: $230,000; Year 2: $180,000; Year 3: $150,000; and Years 4-10: $100,000. Evaluate the investments using each of the capital budgeting methods (IRR, NPV and the Payback Period). The cost of capital for ACME Co. is 8%. Discuss your findings and recommendations. Consider some of the following in your review:

-Were your recommendations the same for each method? Why or why not?

-How would you determine which method is most appropriate for different circumstances?

-Are there any non-financial considerations? If so, what? Show in an Excel document. Round IRR percentage calculations to two decimal places (e.g. 9.12%).

Reference no: EM133064888

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