What aspects of the projects might invalidate the ranking you just derived? How should we correct for each investment’s time value of money, unequal lifetimes, riskiness, and size?

MINI CASE 

In early January 1993, the senior-management committee of Pan-Europa Foods was to meet to draw up the firms capital budget for the new year. Up for consideration were 11 major projects that totaled over Euro 208 million (euros). Unfortunately, the board of directors had imposed a spending limit of only Euro 80 million; even so, investment at that rate would represent a major increase in the firms asset base of Euro 656 million. Thus the challenge for the senior managers of Pan-Europa was to allocate funds among a range of compelling projects: new-product introduction, acquisition, market expansion, efficiency improvements, preventive maintenance, safety, and pollution control.