Phase 5 Individual Project
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Phase 5 Individual Project
Jennifer Kimbrough
Colorado Technical University Online
Applied Managerial Finance
FINC615-1401B-04
Instructor: Dr. Geoffrey VanderPal
March 24, 2014
Does the Coffee Packaging Project Maximize the Firm’s Value?
No, this project will not maximize the firm’s value, because the net present value (NPV) is negative and the IRR is lower than the cost of capital of 5%. Net Present Value (NPV) is going to be the present value of net cash inflows that is generated by a project that will include salvage value if there is going to be any, if the NPV is less than the beginning investment on the project that is being developed. This is the case when it comes to the calculations that we have worked in this assignment because the numbers come up negative.
Should the company undertake this project, the prior project, or both?
I think that the company should undertake the prior project, because the prior project did not show any negative number. The numbers that had to be figured up in this week’s assignment had some negative numbers this would mean that the company had to take a loss. It is known that the company will not always be as successful as we would want it to be. Sometime you have to put out some money to be able to make the type of money that is expected. This is why I think that the company should go with the prior project than the project that we just worked on.
What advice should I give to John Matthews and the board?
The advice that I would give to John Matthews and the board, is to make sure that they have developed a safe and secure plan when trying to try something new or make any type of changes for the company. It is going to be very important to make sure that if they wanted to expand into the coffee packaging production, which they have taken the time to research everything that is needed to take this process. So the next time that the company wants to expand their business they will...
Jennifer Kimbrough
Colorado Technical University Online
Applied Managerial Finance
FINC615-1401B-04
Instructor: Dr. Geoffrey VanderPal
March 24, 2014
Does the Coffee Packaging Project Maximize the Firm’s Value?
No, this project will not maximize the firm’s value, because the net present value (NPV) is negative and the IRR is lower than the cost of capital of 5%. Net Present Value (NPV) is going to be the present value of net cash inflows that is generated by a project that will include salvage value if there is going to be any, if the NPV is less than the beginning investment on the project that is being developed. This is the case when it comes to the calculations that we have worked in this assignment because the numbers come up negative.
Should the company undertake this project, the prior project, or both?
I think that the company should undertake the prior project, because the prior project did not show any negative number. The numbers that had to be figured up in this week’s assignment had some negative numbers this would mean that the company had to take a loss. It is known that the company will not always be as successful as we would want it to be. Sometime you have to put out some money to be able to make the type of money that is expected. This is why I think that the company should go with the prior project than the project that we just worked on.
What advice should I give to John Matthews and the board?
The advice that I would give to John Matthews and the board, is to make sure that they have developed a safe and secure plan when trying to try something new or make any type of changes for the company. It is going to be very important to make sure that if they wanted to expand into the coffee packaging production, which they have taken the time to research everything that is needed to take this process. So the next time that the company wants to expand their business they will...