1. Tour of A-B & C-D
Now, as you can see, we're back in the Excel template,
we're on the tab labeled as A/B. Pretty straightforward assignment here,
we're just asking you to calculate the NPV for one project and for
a second project below. But really the focus here is not the calculations,
but the decision making process. So we're gonna ask you some questions about
these projects, about whether or not the company should proceed.
Now we wanna read the situation up here, the company is adequate discretionary
capital such that it could invest in both projects below. What does that
mean? It's gonna have choices to make. It could invest in both projects,
it could invest in project A or project B,
or none of them. We're also gonna ask you to go ahead and
complete the tab labeled as C/D. And in this situation, the company only
has sufficient capital to invest in one of the projects, so it could
invest in C or D, but not both, or it could invest in
none of them. We're gonna ask you to do these calculations down here
for these three metrics for both projects, and then answer some questions
about them. Goodluck.
2. Let's practice!