Capital Budgeting Case

Capital Budgeting CaseYour company is thinking about acquiring another corporation. You have two choices—the cost of each choice is $250,000. You cannot spend more than that, so acquiring both corporations is not an option. The following are your critical data:Corporation ARevenues = $100,000 in year one, increasing by 10% each yearExpenses = $20,000 in year one, increasing by 15% each yearDepreciation expense = $5,000 each yearTax rate = 25%Discount rate = 10%Corporation BRevenues = $150,000 in year one, increasing by 8% each yearExpenses = $60,000 in year one, increasing by 10% each yearDepreciation expense = $10,000 each yearTax rate = 25%Discount rate = 11%Compute and analyze items (a) through (d) using a Microsoft® Excel® spreadsheet. Make sure all calculations can be seen in the background of the applicable spreadsheet cells. In other words, leave an audit trail so others can see how you arrived at your calculations and analysis. Items (a) through (d) should be submitted in Microsoft® Excel®; indicate your recommendation (e) in the Microsoft® Excel® spreadsheet; the paper stated in item (f) should be submitted consistent with APA guidelines.a. A 5-year projected income statementb. A 5-year projected cash flowc. Net present value (NPV)d. Internal rate of return (IRR)e. Based on items (a) through (d), which company would you recommend acquiring?f. Write a paper of no more 1,050 words that defines, analyzes, and interprets the answers to items (c) and (d). Present the rationale behind each item and why it supports your decision stated in item (e). Also, attempt to describe the relationship between NPV and IRR. (Hint. The key factor is the discount rate used.) In addition to the paper, a Micosoft® Excel® spreadsheet showing your projections and calculations must be shown and attached.