The allied group is considering two investments.
The first investments involves a packaging machine, which can be used to package garments for shipping orders to customers. The second possible investment would be a molding machine that would be used to mold the mannequin parts.
The first possible investment is the packaging machine, which will cost $1400.
The second investment the molding machine would cost $1200. The expected cash flow for the two projects are given below and the cost of capital to the firm is 15%. Both machines will be unusable after five years and have no salvage value.
The net cash flows for the two possible projects are giving in the following table:
year packing machine molding machine
0 $1400 $12000
1 4100 3200
2 3300 2800
3 2900 2800
4 2200 2200
5 1200 2200
Questions:
Address all of the following questions in a brief but through manner.
– What is each project’s payback period?. Provide a detailed explanation of how you calculated the payback period each?.
– What is the NPV for each project?. Provide detailed explanation of how you calculated the payback period for each.
– What is the IRR for each project?. Provide a detailed explanation of how you calculated the payback period for each.
– If both of the projects can be selected, then should both be selected ?. why or why not?. Explain why or why not?
– If the two project are mutually exclusive, which project, if any, should be selected?. Explain why.
Submit your four to five page paper in APA style.
Criteria:
– Calculated each project payback period and came to the correct conclusions.
– Calculated the NPV for each project and came to the correct conclusions.
– Calculated the IRR for each project and came to the correct conclusions.
– Identified which projects, if any, should be selected if two projects were independent of each other and explain why.
– Work was clearly written, with logical flow, with minimal errors ( including APA format) and utilized appropriate citation/reference of sources.
0 $14000 $12000
1 4100 3200
2 3300 2800
3 2900 2800
4 2200 2200
5 1200 2200
Questions: address all of the following questions in a brief but through manner.
– What is each project’s payback period? Provide a detailed explanation of how your calculated the payback period for each.
– What is the NPV for each project? Provide a detailed explanation of how you calculated the payback period for each.
– What is the IRR for each project? Provide a detailed explanation of how you calculated the payback period for each.
– If both of the projects can be selected, then should both be selected? why or why not?. Explain why or why not.
– If the two projects are mutually exclusive, which project, if any, should be selected?. Explain why.
SUBMIT your four to five page paper in APA style.
CRITERIA:
– Calculated each project’s payback period and came to the correct conclusions.
– Calculated the NPV for each project and came to the correct conclusions.
– Calculated the IRR for each project and came to the correct conclusions.
– Identified which projects, if any, should be selected if the two projects were independent of each other and explained why.
– Work was clearly written logical flow with minimal errors ( including APA format) and utilized appropriate citation/reference of sources.