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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

2. 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 15-year projects that differ in several ways. Relative to your firms current EPS, the first project is expected to generate above-average EPS during the first 5 years, average EPS during the second 5 years, and then below-average EPS during the last 5 years. The second project is expected to generate below-average EPS during the first 5 years, average EPS during the second 5 years, and then well-above-average EPS during the last 5 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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