a. According to the assumptions in this bascline case, the project rate of return is negative and the parent rate of return is positive. Should the project be accepted?

b. Are there assumptions that could be reasonably changed to make the project rate of return positive and improve the parent rate of return as well?

c. Are there any external benefits or costs that could change the two project rates of return?

d. If Cemex were a U.S.-based firm, rather than being based in Mexico, would this capital budgeting analysis lead to different results? What are the key differences?

e. Is there a better way to calculate the cash flows or the discount rate used in the case to adjust for the many risks of the investment?