Choosing Innovation Projects
1. What are the advantages and disadvantages of discounted cash flow methods such as NPV and IRR?
2. For what kind of development projects might a real options approach be appropriate? For what kind of projects would it be inappropriate?
3. Why might a firm use both qualitative and quantitative assessments of a project?
4. Identify a development project you are familiar with. What methods do you believe were used to assess the project? What methods do you believe should have been used to assess the project?
5. Will different methods of evaluating a project typically yield the same conclusions about whether to fund its development? Why or why not?
