EFN507 Advanced Capital Budgeting and Project Sponsors


These questions are only guideline questions. You can examine additional analysis to strengthen your argument.
1. Set forth and compare the business cases for each of the two projections under consideration by Emily Harris. Which do you regard as more compelling?
2. Use the operating projections for each project to compute a NPV for each. Which project creates more value?
3. Compute IRR, payback period, and profitability index for each project. How should these metrics affect Harris’s deliberations? How do they compare to NPV as tools for evaluating projects? 
4. Conduct sensitivity analysis. How should it affect Harris’s deliberations? 
5. What additional information does Harris need to complete her analyses and compare the two projects? What specific questions should she ask each of the project sponsors?
6. If Harris is forced to recommend one project over the other, which should she recommend? Why?
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