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)
- 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)
- Which project do you think is more risky? Explain. How can you incorporate differences in risk into your analysis?
- Based on the calculated payback period, NPV, and IRR for each project:
- If these projects are independent, which project or projects would you recommend investing?
- 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?
- What is your final recommendation to Rodriquez? Why?