Case Study 3 Constructed Response Answer Hocus Pocus Company wants to increase sales by adding a new product line. The company is considering three different projects. However, its capital budget is led to $1,500,000 in addition, the comparty requires a tate of return of 10%. The information concerning the three productiv Broomsticks Magic Wands Crystal Balls Net Initial Investment $1,170,000 $983.000 $2210.000 Budgeted Income Statement for the next five year $500,000 $450,000 Cost of Goods Sold 32.000 Gross Margin 420.000 400,000 $18,000 Marketing and Administrative Expenses Net Income "Assume all amounts stated on the budgeted income statement a cash items Required al Determine the net present value for each project assuming all cash flows case after five years Case Study 3 Constructed Response Answer al bi Which project should Hocus Pocus invest in and why? Case Study 3 Constructed Response Answer b If Hocus Pocus had a capital budget limit of $2.300.000, how should they investit Case Study 3 Constructed Response Answer c