Marketing Question

Fenton, Inc., has established a new strategic plan that calls for new capital investment. The company has a 9.8% required rate of return and an 8.3% cost of capital. Fenton currently has a return of 10% on its other investments. The proposed new investments have equal annual cash inflows expected. Management used a screening procedure of calculating a payback period for potential investments and annual cash flows, and the IRR for the 7 possible investments are shown. Each investment has a 6-year expected useful life and no salvage value.

Payback Period, IRR, Investment Cost (respectively): Project A1, 4.2, 10.5%, $130,000; Project B2, 5.9, 5.1%, $67,000; Project C3, 5.0, 13.4%, $83,000; Project D4, 4.8, 7.4%, $61,000; Project E5, 3.2, 12.1%, $115,000; Project F6, 4.0, 9.9%, $65,000; Project G7, 6.3, 9.8%, $76,000.

Write a business letter to the Board of Directors objectively weighing out the pros and cons of this project and make your recommendation(s). Review the video in the Weekly Review section for a tutorial video on How to Write a Business Letter.

  1. which project(s) is/are unacceptable and briefly state the conceptual justification as to why each of your choices is unacceptable.
  2. Assume Fenton has $330,000 available to spend. Which remaining projects should Fenton invest in and in what order?
  3. If Fenton was not limited to a spending amount, should they invest in all of the projects given the company is evaluated using return on investment?Due Date for Assignment: By 11:55 PM ET on Sunday Total Point Value: 100 pointsWeekly Learning Goals:5. Evaluate and Determine Whether to Sell or Process Further (Course Learning Outcomes: #4/Program Learning Outcomes: #6 & #2)

Rubric Name: MBA603 Week 6 Business Letter

Criteria Level 5

20 points

Level 4

15 points

Level 3

10 points

Level 2

5 points

Level 1

0 points

Criterion Score

Grammatical Correctness

No Grammatical Errors

1 to 2 Grammatical Errors

3 to 4 Grammatical Errors

5 or more Grammatical Errors

No Submission

Score of Grammatical Correctness,

/ 20

Clarity of Letter

Excellent Clarity

Good Clarity

Fair Clarity

Poor Clarity

No Submission

Score of Clarity of Letter,

/ 20

Organization of Letter

Excellent Organization

Good Organization

Fair Organization

Poor Organization

No Submission

Score of Organization of Letter,

/ 20

Identification of the 3 Requirements

Excellent Identification of the 3 Requirements

Good Identification of the 3 Requirements

Fair Identification of the 3 Requirements

Poor Identification of the 3 Requirements

No Submission

Score of Identification of the 3 Requirements,

/ 20

Recommendation Made

Excellent on Recommendation Made

Good Recommendation Made

Fair Recommendation Made

Poor Recommendation Made

No Submission

Score of Recommendation Made,

/ 20

TotalScore of MBA603 Week 6 Business Letter,

/ 100

Overall Score

Level 4

11 points minimum

Level 3

8 points minimum

Level 2

5 points minimum

Level 1

0 points minimum

Requirements:

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