Choice of method, risks, addressing company policy Green Jade Resorts, a
Singapore company that owns and operates golf resorts, has hired you to analyze its
investment opportunities in the Southwest United States and Mexico. The company
managers have always used the payback method and have asked you to prepare an
analysis comparing three different resorts, one near the quaint mining town of
Bisbee, Arizona; another at Puerta Penasco, a beach resort area on the Baja coast of
Mexico; and a third golf resort near Taos, New Mexico.
REQUIRED:
• A. List four methods that could be used to analyze this long–term decision.
Describe each method in your own words.
• B. In your own words, describe the advantages and disadvantages of each
method you identified in part (A).
• C. Explain why it is not possible to perfectly predict a project’s cash flows.
• D. In using quantitative results for decision making, would you place equal reliance on the results of all four analysis techniques? Explain.
• E. Discuss how the managers of the Singapore company might respond to
your advice if you recommend an analysis method other than the payback
method.
• F. Write a brief memo to the CEO of the Singapore company, recommending
your choice of analysis methods and explaining the most important issues for
the CEO to consider when choosing an analysis method.
