A consumer product fi rm fi nds that its brand of laundry detergent is losing market share, so it decides that it needs to “freshen” the product. One strategy is to maintain the current detergent...

A consumer product fi rm fi nds that its brand of laundry detergent is losing market share, so it decides that it needs to “freshen” the product. One strategy is to maintain the current detergent formula but to repackage the product. The other strategy involves a complete reformulation of the product in a way that will appeal to environmentally conscious consumers. The fi rm will pursue one strategy or the other but not both. Cash fl ows from each proposal appear below, and the fi rm discounts cash fl ows at 13 percent. Year Repackage Reformulate 0 –$3,000,000 –$25,000,000 1 2,000,000 10,000,000 2 1,250,000 9,000,000 3 500,000 7,000,000 4 250,000 4,000,000 5 250,000 3,500,000 a. Rank these investments based on their NPVs. b. Rank these investments based on their IRRs. c. Rank these investments based on their PIs. d. Draw NPV profi les for the two projects on the same set of axes and discuss these profi les. e. Do these investment rankings yield mixed signals?