What are the NPV, PI and IRR values for projects A & B? What factors contribute to the ranking discrepancies, and which project should be selected? Would the decision change if Project B is a typical project in the plastic moulding industry, and the company typically targets an IRR of around 12%?

On January 11, 2023, the finance committee of Mada Plastic Molding Company (MPMC) met to evaluate eight capital-budgeting projects. They had four mutually exclusive profit projects to consider. 1. Projects A and B involved the use of precision equipment for manufacturing vacuum containers and photographic equipment, respectively. Both projects required exclusive use of limited precision equipment and had distinct cash flow profiles over three years. Appendix Project A involves the production of vacuum containers for thermos bottles, which would be manufactured in five different size and color combinations. This project spans a 3-year period, and MPMC would receive a guaranteed minimum return plus a percentage of the sales. Here are the cash flows associated with Project A: - Year 0: Initial investment of $75,000 - Year 1: Cash inflow of $10,000 - Year 2: Cash inflow of $30,000 - Year 3: Cash inflow of $100,000 In Year 0, MPMC would need to make an initial investment of $75,000 to initiate the project. Subsequently, the project is expected to generate positive cash flows, with returns increasing each year. In addition to the guaranteed minimum return, the project's profitability would also be linked to a percentage of the sales generated by the vacuum containers. The project's success and profitability would depend on factors such as the demand for these vacuum containers, production efficiency, and the market conditions for thermos bottles. MPMC would need to assess the project's financial viability and compare it with the other projects being considered to determine whether it should be undertaken. Project B involves the manufacture of inexpensive photographic equipment for a national photography outlet. Like Project A, Project B is also a mutually exclusive project, meaning MPMC would have to choose between these two projects since they both require the use of precision equipment with limited excess capacity. Here are the cash flows associated with Project B: - Year 0: Initial investment of $75,000 - Year 1: Cash inflow of $43,000 - Year 2: Cash inflow of $43,000 - Year 3: Cash inflow of $43,000 In Year 0, MPMC would need to invest an initial amount of $75,000 to initiate Project B. Over the next three years, the project is expected to generate positive cash inflows, with each year's inflow amounting to $43,000. Project B involves the manufacturing of photographic equipment, and the success and profitability of the project would depend on factors such as the demand for the equipment, production efficiency, and the competitive landscape in the photography industry. Since the project requires precision equipment and has a similar cash flow profile to Project A, MPMC needs to evaluate which of these twp projects would provide the best financial return and align with the company's strategic goals