Week 1 Discussion The Strategic Compass
January 13, 2021
Response to Peers
January 13, 2021

Discussion: Capital Budgeting and Risk Analysis


  • Research 2 mutually exclusive investment projects to compare. The projects may involve any kind of investment, as long as the time frame for one of the investments is a year (short term) and time frame for the other investment is five years minimum (long term).
  • Analyze the reasons why the short-term project that you have chosen might be ranked higher under the NPV criterion if the cost of capital is high, while the long-term project might be deemed better if the cost of capital is low. Determine whether or not changes in the cost of capital could ever cause a change in the internal rate of return (IRR) ranking of two projects.

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