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Question: 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 Questions: 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 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.
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Cap is trying to convince Widow Jones to purchase some Neotech stock, but she is reluctant because Neotech has never paid a dividend. She depends on steady dividends to provide her with income.
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You own a portfolio that is 38 percent invested in Stock X, 22 percent in Stock Y, and 40 percent in Stock Z. The expected returns on these three stocks are 10 percent, 15 percent, and 12 percent, respectively. What is the expected return on the p..
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The market yield of a twelve-year 7 percent annual-pay bond is 6 percent. The bond is callable in three years and its yield to call is 5.7 percent. What is the call price of the bond?
If the expected rate of return for a security is 18%. Beta=2 and market rate is 12%, then what is it the Risk Free Rate? If the expected rate of return for a security is 12%, Beta=3 and market-rate is three times the Risk Free Rate. What is it the m..
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