The projects which are evaluated above are for the increase of the company profits, growth and prosperity, which consequence in the increase of the shareholders wealth through capital gains and the dividend. The shareholders were demanding for the increase of their share price or the capital gain in other word.
So for this it is clear that the Project E is the project with least priority as it will give loss to the company. It is good that company has the ability of the vertical integration but its only work when there is a benefit. In the proposed backward integration, there were losses in the first five years and it also further seems that the company sales will decrease for the new product. Therefor, it is not recommended to adopt such project which will lead to the loss and put no benefits to the company.
Project C and D:
The projects C and D will least effect the company’s share price and dividend or the future sales growth or the expansion. Although these projects will pay the positive effect in the company spatial and décor but will not directly affect the share price. So we will also keep these projects aside and will not consider. Also if company feels that it is necessary to renovate it or install carpet or have new floor, it has to see its vault. It they have resources they must go for the vinyl flooring or if it has limited resources then it must go for carpeting.
Projects A and B:
As for Projects A and Projects B are concern we will prefer project B over Project A due to the greater NPV value and the Higher Internal rate of return. These projects have very less and marginal differences as for as capital budgeting techniques are concerns but its depend on the company that either it has the invest huge amount for the greater income or not. If it may so it is recommended that it must adopt the project B. Otherwise Project A also has the ability to generate positive cash flows but in little amounts.