The goal of management is to create value for the shareholders, therefore it is necessary to make decisions that are based on a reliable and accurate measurement of value. There are numerous such measures for capital projects.

Imagine a situation where you are appointed as a financial manager to provide consultation to a client who happens to be an owner of a reputable corporation and is considering few investment projects. The client is asking for an evaluation of the impact of using various investment decision making criteria and their impact on the outcome and success of the investments. For this purpose, you should consider both advantages and disadvantages that these techniques entail.

Required:

1. Provide an introduction of different types of investment decision making criteria (Payback Period, Return on Investment, Discounted Cash Flow Techniques, Net Present Value, Profitability Index or Benefit-cost Ratio)

2. Evaluate and communicate to the client the ways by which his decisions can be affected by these methods and briefly propose the ways he can deal with this issue (You need to support your arguments by providing numerical examples).