Executive Summary
Three projects have been summated for approval. The molding machinery project is a stand alone project. The other two are divided into competing proposals for each project. IBM and SUN are competing for the computer facility, while York and Curry are competing for the factory location. An assumption that the non-financial cost where not included in the cost and return analysis was made. This means that this report deals only with the financial properties of each project.
A different department calculated the IRR for each project. We were not given the calculations or the reasoning behind them. We have made the assumption that the non-financial aspects of the projects where not included into the calculations. Therefore we can only make recommendations for the company on the financial aspects. The non-financial aspects are mentioned, but they have not been taken into consideration.
Therefore, from the financial standpoint the company should do the factory first, and then the computer facility, and last the molding machinery update project. The company should use York for the factory and IBM for the computer facility.
The reason for choosing York over Curry is that there is a better return for every dollar spent. Curry has a greater return, but it has a greater outlay of capital which means that it is a less efficient use of capital. From a financial standpoint IBM is better than SUN because it is a more efficient use of capital. It offers greater return with less initial costs. Two different ways to do the molding machinery updates where discussed, however it was not mentioned if there was a difference in the costs and returns between the two ways. At this time the company should update the machinery, however it first need to explore the possible differences, in cost and return, between overhauling the current equipment and getting new equipment. All of these projects would be profitable and are therefore worth...