Bright Light Investments is currently considering three investment projects. The following data was provided for the projects under consideration:

Year Machine A Machine B Machine C

$ $ $

Initial Investment $0(400000)(300000)(300000)$

Cash Inflows: $18000060000100000$

$212000060000100000$

$312000060000150000$

$416000060000-$

$520000060000-$

The Project$$s cost of capital is $5\%.$

Required:

Calculate the payback period for all three projects $[6$ marks$]$

Calculate the Net Present Value for all three projects $[11$ marks$]$

Explain the relative advantage or disadvantage of each project. $[3$ marks$]$

Based on capital rationing there was a budget of $$1000000$ for all three projects which are independent. Make a recommendation as to which project or projects should be undertaken explaining the reason for your choice. $[5$ marks$]$