McCormick & Company Investment Decision Business & Marketing Essay (Essay Sample)

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McCormick & Company Investment Decision
Every company must perform relevant calculations before investing in any project to identify whether it’s viable or not. That is the reason McCormick & Company consider evaluating the project’s feasibility before building a factory in Largo, Maryland. The project will cost the firm $14,000,000 for buying the land and $350,000,000 for acquiring appropriate equipment and building. Based on the calculations to determine the project’s viability, the cash outflow is -$364,000,000. The discount rate is 7%, and the internal return rate (IRR) is 18.38%. In the scenario at hand, McCormick & Company need to invest in the project based on the IRR and the net present value (NPV). The project of building a new factory has a higher IRR than expected return (Schlegel et al. 68). In other terms, the IRR is positive and above the discount rate. Therefore, if everything becomes successful, the company is likely to maximize its profits.