What is each project payback period

Assignment Help Business Management

Reference no: EM132755156

Instructions

The Allied Group is considering two investments. The first investment 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 $14,000. The second investment, the molding machine, would cost $12,000. The expected cash flows 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 given in the following table:

Year Packaging Machine Molding Machine

0 ($14000) ($12,000)

1 4100 3200

2 3300 2800

3 2900 2800

4 2200 2200

5 1200 2200

Address all of the following questions in a brief but thorough manner.

What is each project's payback period? Provide a detailed explanation of how you 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 internal rate of return (IRR) 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.

Reference no: EM132755156

Questions Cloud

Current events in health care administration leadership : Current Events in Health Care Administration Leadership and the Fiedler Contingency Theory

Balanced snacking : Would a D2C model work for snacks? How would one scale such a business, especially sourcing raw ingredients?

What is the role of technology in business : You will read the closing case "IBM's Watson". What is the role of technology in business?

Long term potential for successful internationalization : What types of entry strategies were used by these retailers and how did they affect their long term potential for successful internationalization?

What is each project payback period : What is each project's payback period? Provide a detailed explanation of how you calculated the payback period for each.

Explicit strategies for technology development : Do you feel that countries and companies need explicit strategies for technology development,

Hcahps survey scores : Why might patients who experience longer hospital stays tend to give lower scores on the HCAHPS survey?

Benefits of separating rail infrastructure from operations : What do you think is the difference in the organization of the American Railway system versus European Railway system?

Security views border and transportation security : Describe and analyze how the CRS Report for Security views border and transportation security.

User Account

All Pages