Question: Lapides Ltd. is a small company that is currently analyzing capital expenditure proposals for the purchase of equipment. The capital budget is limited to $250,000,

Lapides Ltd. is a small company that is currently analyzing capital expenditure proposals for the purchase of equipment. The capital budget is limited to $250,000, which Lapides believes is the maximum capital it can raise.

The financial adviser is preparing an analysis of four projects that the company is considering, as follows:

Instructions
(a) Calculate the cash payback period for each of the four projects.
(b) Calculate the net present value for each project at a cost of capital of 12%.
(c) Which projects, if any, would you recommend funding, and why?

Project A $200,000 Project B $190,000 Project I $210,000 Net initial investment: Projected cash inflows: Year 1 S250,000 5 8 0 7 7 5

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