Project management recommendation

Project management recommendation

Introduction

Piper Industries Corporation is the country largest and well known produces of hydraulic fittings and adaptors. The company was incorporated in year 1946 and since then it has committed of producing innovative and quality product and selling it at a low cost in the market. Because of these qualities, the company has able to create a niche for itself in global market and is successful in extending the pool of its value customers (Atkinson et al, 2006). Carrying the tradition of innovation and success forward the company is in pursue of launching new product in the market, however, is in dilemma of selecting the best project out of the three choices available to the company.

Discussion

The primary focus of the Piper Industrial Corporation has been quality production and customer satisfaction, and in order to maintain this image the CEO of the company has instructed its financial team to conduct in-depth evaluation of all proposed project within next month and then provide the management with your updated finding so that they can take appropriate decision. In order to select best option for the company we have calculated NPV of each project, IRR of the project, Break even Analysis and formed a feasibility report.

Calculation of IRR NPV and breakeven Analysis of Projects

Jupiter

Palomino

Stargazer

NPV

25000

35000

70000

IRR

13

12

14

Breakeven point

50

60

45

After calculating the NPV, IRR and breakeven analysis of three proposed project it was analyzed that every project would bring benefit to the company in form of higher return and long-term profitability. For instance, according to the concept of NPV it compares the dollar value of investment made today in with the dollar value of investment made in future and if NPV of the project is positive then company must select that investment project(Hahn et al, 2008). In this condition NPV of the entire proposed projects are positive, however, NPV of project three is higher than the other projects.

On the other hand, according to the concept of IRR project having internal rate of return higher than the original investment must be selected for investment, and in this case IRR of three projects are higher than the original investment but IRR of project three is more. Similarly, according to the breakeven analysis it would require company to sell around 50 units of Jupiter to achieve breakeven, 60 units of Palomino and 45 Units of Stargazer.

Meanwhile, during the analyzing of three proposed plans it was observed ...