If we are comparing projects of unequal sizes (requiring unequal amounts of investment), screening methods like NPV are only good for deciding if a product or service is worth considering along with other valid opportunities. In that case, we have to use a ranking methodafter screening the projects. How do we do that?
For example, you have been given the following information: (n = 3; i = 10%) How will you rank these projects?
Project R
Project S
Project T
Investment required
$13,000
$59,000
$89,000
Annual net cash flows
$6,000
$25,000
$43,000
99
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