Calculated Payback Period

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.

 
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