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Indicates year in which payback is accomplishea. Case Synopsis and Objectives This case presents the cash flows of eight unidentified investments, all of equal initial
"Indicates year in which payback is accomplishea. Case Synopsis and Objectives This case presents the cash flows of eight unidentified investments, all of equal initial investment size. Your task is to rank the projects. The first objective of the case is to examine critically the principal capital-budgeting criteria. A second objective is to consider the problem that arises when net present value (NPV) and internal rate of return (IRR) disagree as to the ranking of two mutually exclusive projects. Finally, the case is a vehicle for introducing the problem created by attempting to rank projects of unequal life and the solution to that difficulty - the equivalent-annuity criterion. Suggested Questions to Explore This case exercise is straight forward. Use the cash flows of the projects listed to identify the type of project. The assignment is one matching question. Simply match the project \# with the project type. Each correct match is worth 12.5%. A. Partially Amortizing Bond B. Advertising Campaign C. Zero coupon bond D. Nuclear Power plant; pesticide factory E. Home Mortgage F. One-year bond G. Mine H. Orchard
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