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Capital Expenditures Capital expenditures have a significant impact on the financial performance of the firm; therefore, criteria for selecting projects must be evaluated with great care. Of the two corporations the firm is deciding to acquire, Corporation B is clearly the better investment as shown in Table 1 supported by the following data: net present value (NPV), internal rate of return (IRR), payback period, profitability index (PI), discounted payback period, and modified internal rate of return (MIRR) in addition to 5 year projections of income and cash flows. Decision Method Corp A Corp B NPV 20,979 40,252 IRR 13.05% 16.94% MIRR 11.79% 14.36% PI 8.39% 16.10% Payback 4.64 4.31 Discounted Payback 4.40 4.76 Table 1: Decision Method Results (See Excel Spreadsheet for details) The 5 year projections of both Corporations A and B's income statements and cash flows indicate that between the two corporations, Corporation B will maximize the firm's value the most. This decision is further evidenced by the net present value obtained for both corporations. NPV is defined as the...

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