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nirvana33 [79]
3 years ago
11

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.
1. Calculate each project's payback period.
2. Calculate the NPV for each project.
3. Calculate the IRR for each project.
4. If the two projects are independent of each other, which projects, if any, should be selected? Explain why or why not.
5. If the two projects are mutually exclusive, which project, if any, should be selected? Explain why.
Business
1 answer:
Lemur [1.5K]3 years ago
3 0

Answer:

1. Calculate each project's payback period.

Payback period packaging machine = the positive cash flows are lower than the initial outlay

Payback period molding machine = 4.45 years

2. Calculate the NPV for each project.

Using a financial calculator

NPV for packaging machine = -$4,178.24

NPV for molding machine = -$2,907.50

3. Calculate the IRR for each project.

IRR for packaging machine = -0.86%

IRR for molding machine = 3.5%

4. If the two projects are independent of each other, which projects, if any, should be selected? Explain why or why not.

None should be selected since the NPVs are negative

5. If the two projects are mutually exclusive, which project, if any, should be selected? Explain why.

None should be selected since the NPVs are negative

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RAWRRRRRRRRR Whahahaha​
____ [38]

Explanation:

wow

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3 0
2 years ago
Why does the credit card company set the minimum payment so low
Illusion [34]

Answer:

To increase profit from interests by increasing duration of balance repayment.

Explanation:

The purpose of every business is to make profits and the reason why every credit card company includes a minimum payment is not just to make it easier to pay but by only making minimum payments, credit card holders could be kept as customers and paying interests on debt for longer.

Secondly, the more the periods the more likely you'll default on some of them and pay penalty fees which means additional income for the companies

5 0
3 years ago
To overcome possible problems with budgets that are developed only by top level managers, an alternative is to use: A. Mandatory
Dafna11 [192]

Answer:

Paticipative budgets

Explanation:

A budget can be defined as a financial plan which gives an estimate of income and expenditures. A budget is a tool that is utilized by different organisations to manage their resources inorder to achieve their various objectives and goals.

A budget shows the different costs incurred by the organisation within a particular period of time.

Participative budgets is a type of budget in which the low level management of an organization are involved in the preparation of budget. It helps to prevent top managers from unruly behaviours.

Participative budget enables the top level and low level managers to share information that will lead to the growth of the organisation.

8 0
2 years ago
The following monthly data are available for Coronado Industries. which produces only one product: Selling price per unit, $38;
In-s [12.5K]

Answer:

The correct answer is C.

Explanation:

Giving the following information:

Selling price per unit= $38

Unit variable expenses= $14

Total fixed expenses= $42,000

Actual sales for June= 3000 units.

First, we need to calculate the break-even point in dollar using the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 42,000/ [(38 - 14)/38]

Break-even point (dollars)= $66,500

Now, we can calculate the margin of safety in dollars:

Margin of safety= (current sales level - break-even point)

Margin of safety= (3,000*38 - 66,500)

Margin of safety= (114,000 - 66,500)

Margin of safety= $47,500

5 0
3 years ago
Kristi's Pottery sold 200 tiles at $25.00 each to a charge customer, terms 1/10, n/30. Which entry is required to record this tr
loris [4]
Debit Accounts Receivable $5,000; credit Tile Sales $5,000
4 0
3 years ago
Read 2 more answers
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