Managerial Environment The Allied Group, homework help

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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.

  • Calculate each project’s payback period.
  • Calculate the NPV for each project.
  • Calculate the IRR for each project.
  • If the two projects are independent of each other, which projects, if any, should be selected? 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


    Assignment 3 Grading Criteria

    Maximum Points
    Calculated each project’s payback period and came to the correct conclusions.

    50
    Calculated the NPV for each project and came to the correct conclusions.

    50
    Calculated the IRR for each project and came to the correct conclusions.

    50
    Identified which projects, if any, should be selected if the two projects were independent of each other and explained why.

    30
    Identified which project, if any, should be selected if the two projects were mutually exclusive and explained why.

    30
    Work was clearly written, with logical flow, with minimal errors (including APA format) and utilized appropriate citation/reference of sources.

    40
    Total:

    250


     

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