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How firms decide on which projects to spend their resources. Some of the factors are creating value, prioritizing, and accounting for risk. How do you
How firms decide on which projects to spend their resources. Some of the factors are creating value, prioritizing, and accounting for risk. How do you decide how to spend your resources?
Your task is to find creative SIMILARITIES between the following capital budgeting models and NON-MONETARY decisions you have made in your life. Examples of non-monetary payoffs include getting healthier, having more fun, becoming more skilled/wise/confident, etc.
- Payback period
- Net present value
- Internal rate of return
Respond to the following in your post:
- Describe a situation in which you made a decision based on which option would pay off quicker.
- What was the nature of the (non-monetary) payoff you were seeking?
- Describe the effort and risks involved with each option you considered.
- In retrospect, was this the right approach to this situation? Why?
- Describe a situation in which you made a decision based on which option would give you the greatest total payoff.
- What was the nature of the (non-monetary) payoff you were seeking?
- Describe the effort and risks involved with each option you considered.
- In retrospect, was this the right approach to this situation? Why?
- Describe a situation in which you made a decision based on which option would provide the most efficient payoff on your effort.
- What was the nature of the (non-monetary) payoff you were seeking?
- Describe the effort and risks involved with each option you considered.
- In retrospect, was this the right approach to this situation? Why?
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