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Prompt: Evaluate an investment decision among two projects according to the four investment decision rules. Scenario: Fictional organization, ABC Company, is considering two alternative investments, Project One and Project Two. Project One Initial Cost: $1,000,000 Annual Cash Flow: $200,000 for 10 years Discount Rate: 0.05 Project Two Initial Cost: $5,000,000 Annual Cash Flow: $300,000 (forever) Discount Rate: 0.05 Step One: Calculate NPV for each project. Step Two: Calculate the IRR for each project. Step Three: Calculate the payback period for each project. Step Four: Calculate the PI for each project. Question Two: Which project would you invest in, Project One or Project Two? How does each decision rule lead you to your specific decision?

          Prompt: Evaluate an investment decision among two projects according to the four investment decision rules.
Scenario: Fictional organization, ABC Company, is considering two alternative investments, Project One and Project Two.
Project One
Initial Cost: $1,000,000
Annual Cash Flow: $200,000 for 10 years
Discount Rate: 0.05
Project Two
Initial Cost: $5,000,000
Annual Cash Flow: $300,000 (forever)
Discount Rate: 0.05
Step One: Calculate NPV for each project.
Step Two: Calculate the IRR for each project.
Step Three: Calculate the payback period for each project.
Step Four: Calculate the PI  for each project.
Question Two: Which project would you invest in, Project One or Project Two? How does each decision rule lead you to your specific decision?

Added by Gregg M.

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