Capital Budgeting and Risk Analysis
* From the e-Activity, analyze the reasons why the short-term project that you have chosen might
be ranked higher under the NPV criterion if the cost of capital is high, while the long-term project might
be deemed better if the cost of capital is low. Determine whether or not changes in the cost of capital
could ever cause a change in the internal rate of return (IRR) ranking of two (2) projects.
* From the scenario, take a position for or against TFC's decision to expand to the West Coast.
Provide a rationale for your response in which you cite at least two (2) capital budgeting techniques
(e.g., NPV, IRR, Payback Period, etc.) that you used to arrive at your decision.
Week 6 e-Activity
Use the Internet to research two (2) mutually exclusive investment projects to compare. The projects
may involve any kind of investment, as long as the time frame for one (1) of the investments is a
maximum of one (1) year (short term) and the time frame for the other investment is five (5) years
minimum (long term). Be prepared to discuss.
WEEK 6 SCENARIO
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