Reference no: EM132554357

Question 1: If you were to prioritize the criteria for a successful screening model, which of those criteria do you rank at the top of your priority list? Why?

Question 2: What are the benefits and drawbacks of project checklists for screening alternatives?

Question 3: How are financial models superior to other screening models? How are they inferior?

Question 4:

a.Define the efficient frontier. The dotted lines represent the minimum return and the maximum risk that the company will accept. Which projects would be suitable for retaining and which should be dropped from the company's portfolio? Why?

b. Discounted Payback. Your company is seriously considering investing in a new project opportunity but cash flow is tight these days. Top management is concerned about how long it will take for this new project to pay back the initial investment of $50,000. You have determined that the project should generate inflows of $30,000, $30,000, $40,000, $25,000, and $15,000 for the next five years. Your firm's required rate of return is 15%. How long will it take to pay back the initial investment?