This essay focuses on the cost of capital to the firm. This essay focuses on new common stock and new bond issues .the company’s operation.
two investments. The first investment involves a
packaging machine, which can be used to This essay focuses on new common stock and new bond issues .the company’s operation by making
significant investments in several opportunities available to the group.. 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
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
Firstly, What is each project’s payback period? Provide a detailed explanation of
how you calculated the payback period for each.
Secondly, What is the NPV for each project? Provide a detailed explanation of how
you calculated the payback period for each.
Thirdly, What is the IRR for each project? Provide a detailed explanation of how
you calculated the internal rate of return (IRR) for each.
Further, 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.
Secondly, Name your report: MBA5009_W5_ LastName_FirstInitial.doc.
Thirdly, Submit to the Submissions Area by the due date assigned.
Further, be cool
Finally, be cautious