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2 . As CFO, you are responsible for weighing the financial pros and cons of the many investment opportunities developed by your company s research
As CFO, you are responsible for weighing the financial pros and cons of the many investment opportunities developed by your companys research and development division. You are currently evaluating two competing year projects that differ in several ways. Relative to your firms current EPS, the first project is expected to generate aboveaverage EPS during the first years, average EPS during the second years, and then belowaverage EPS during the last years. The second project is expected to generate belowaverage EPS during the first years, average EPS during the second years, and then wellaboveaverage EPS during the last years. Is the choice obvious if you expect the second investment to result in a larger overall earnings increase? Given the goal of the firm, what issues will you consider before making a final decision?
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