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11 Case model
2/13/2020 16:04
Chapter 11. The Basics of Capital Budgeting
You recently went to work for Allied Components Company, a supplier of auto repair parts used
in the after-market with products from Daimler AG, Ford, Toyota, and other automakers.
Your boss, the chief financial officer (CFO), has just handed you the estimated cash flows for two
proposed projects. Project L involves adding a new item to the firm’s ignition system line; it would
take some time to build up the market for this product, so the cash inflows would increase over
time. Project S involves an add-on to an existing line, and its cash flows would decrease over
time. Both projects have 3-yea...