Can anyone discuss quantitatively of how you would evaluate these competing projects.
Division A
Increasing the investment in Receivables in hopes of generating additional sales and profit.
The total upfront investment would be $10M, and cash flows from year one to infinity would be 1,700,000 per year
2) Division B
Carrying 45 days of inventories instead of 30 days, in hopes of reducing the cost of lost sales.
This new policy requires a total upfront investment of $10Million, and cash flows from year one to infinity would be 1,500,000 per year.
In both cases the financial projections are reasonable, and both investments are strategically equally relevant to H.
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Tags: Inventories, Projects Division —
