Qualitative Issues in Investment Analysis

The following are some selected quotes from senior executives:

Chairman of Amgen inc. (biotech company): "You cannot really run the numbers, do net present value calculations, because the uncertainties are really gigantic... You decide on a project you want to run, and then you run the numbers [as a reality check on your assumptions.] Success in a business like this is much more dependent on tracking rather than on predicting, much more dependent on seeing results over time, tracking and adjusting and readjusting, much more dynamic, much more flexible."

Chief Financial Officer of Merck & Co inc. ( a phamaceutical company) " at the individual product level-- the development of a successful new product requires on the order of $230 million on Research and development, spread over more than decade discounted cash flow style analysis does not become a factor until development is near the point of manufacturing scale up effort. Prior to that point, given the uncertainties associated with new product development, It would be lunacy in our business to decide that we know exactly whats going to happen to a product once it gets out."

Which role of capital investment analysis is appropiate for each prompt? (For example average rate of return, net present value concept method etc. )