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A:
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A: 1.
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- The board of directors is interested in investing in a new technology. Appropriating existing retained earnings is a choice for funding the new technology. You are a consultant to the board. How would you explain this option to the board members so that they could make an educated decision?What value would a discussion of the profitability index add to a conversation where you are trying to communicate the benefits of a positive net present value project to a firm’s general management team? (Explain clearly and in-depth.)Good managers not only identify and evaluate realoptions in projects—they also structure projects soas to create real options. Suppose a company isconsidering a project to build an electric generating plant. Name some real options that might bebuilt into the project, explain how they could beevaluated, and discuss their effects on the project’sNPV.
- Suppose you are a project manager in a firm. Will you prefer to use NPV or payback method to choose among different projects? Give reasons to support your answer.What are the components of a strategic plan? Find one of these components for the company you work for and share (if you are not currently employed, use the college you attend).Achieving sustainable development will likely require the cooperation of communities, governments, and businesses. The World Business Council for Sustainable Development (WBCSD) claims that ecoefficiency is the business contribution to sustainable development. Required: 1. What is sustainable development? 2. Explain why the WBCSDs claim about ecoefficiency may be true. 3. WBCSD has recently noted (http://www.wbesd.org): the good news is that ecoefficiency is working in the companies that try it. The troubling news is that it is not being tried on a large enough scale, even though it makes good business sense. Why do you think the ecoefficiency paradigm is not as widely accepted as it perhaps ought to be? What would you suggest to increase the number of companies involved in ecoefficient projects?
- What are the methodologies for analyzing the development and testing of creditworthiness for investment projects of innovative startups?Why do you think CFOs tend to look at strategic concerns before they look at the NPV of a project? If value creation means choosing projects with a positive NPV, what does strategic analysis achieve?