Which project do you think is more risky? Explain. How can you incorporate differences in risk into your analysis?

Management by Geoffrey

Case Questions

 Estimate the incremental cash flows for Sneaker 2013 project. Estimate the project’s payback period, net present value, and internal rate of return. (Use excel template posted)

 

  1. Estimate the incremental cash flows for Persistence project. Estimate the project’s payback period, net present value, and internal rate of return. (Use excel template posted)

 

  1. Which project do you think is more risky? Explain. How can you incorporate differences in risk into your analysis?

 

  1. Based on the calculated payback period, NPV, and IRR for each project:
    1. If these projects are independent, which project or projects would you recommend investing?
    2. If these projects are mutually exclusive, which project would you recommend? How would you consider the difference in the life of the projects in making this decision?

 

  1. What is your final recommendation to Rodriquez? Why?