Question
The Investment Detective presents the cash flows of eight unidentified investments, all of equal initial investment size. Your task is to rank the projects. The
The Investment Detective presents the cash flows of eight unidentified investments, all of equal initial investment size. Your task is to rank the projects. The case has several objectives:
1) gets you to examine critically the principal capital budgeting criteria.
2) have you consider the problem that arises when NPV and IRR disagree as to the ranking of two mutually exclusive projects.
3) Introduces you to the problem created by attempting to rank projects of unequal life and the solution to that difficulty - the equivalent-annuity criterion.
I think we are supposed to come up with 8 investments, of equal initial investment. then rank them.
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