What is each projects payback period

Assignment Help Business Management

Reference no: EM132506156 , Length: 5 Pages

Assignment - 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.

Note - Submit your 4 to 5 page Microsoft Word document, using APA style.

Reference no: EM132506156

Questions Cloud

Discuss how rosalie ltd should account for the costs : Discuss how Rosalie Ltd should account for these costs. Provide journal entries with an explanation of why these are the appropriate entries.

How much must have saved in the rrsp : If the annuity pays 5% interest compounded monthly, how much must they have saved in their RRSP if they live until their 81, 91 or 101 birthday?

How much is worth today : Fifteen (15) years ago, your parents purchased an investment for $2,500. If the investment earned 6 percent interest each year, how much is it worth today?

What the type of account and normal balance of : When a company disposes of a discontinued operation (segment), the transaction should be included in the income statement as a gain or loss on disposal

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

Pretend for a moment that the spot exchange rate : Assuming that IRP holds, what will the 180 day forward rate be?

Calculate the break-even point assuming fixed costs : Calculate the break-even point assuming fixed costs increase to $156,400. (Do not round intermediate calculations.)

Compute the total payroll costs relating to the period : Compute the total payroll costs relating to the period from December 29-31 (Assume $1,008 in total unemployment taxes.) Provide the journal entries in December

What is the price of bonds today : Today these bonds are yielding 18%. Coupon is paid annually. What is the price of these bonds today?

User Account

All Pages