Question 1) Your company is considering three mutually exclusive projects. Project A will expand the existing business operations in the current location. Project B will expand the existing business operations to the adjacent county. Project C will expand into a new business operation that is not related to current business operations. Surprisingly, the projected financial cash flows and the analyses of these two projects yield exactly identical results:
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Project A
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Project B
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Project C
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NPV @ 15%
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$12,100
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$12,100
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$12,100
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IRR
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25%
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25%
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25%
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Payback
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2.7 yrs
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2.7 yrs
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2.7 yrs
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How should your company determine which project to select? Are there non-financial considerations that should be taken into account? Are there additional financial analyses that should be performed?
Question 2) Select any Initial Public Offering (IPO) of your choice. Use the Internet to identify the following characteristics of your selected IPO:
a. Initial offering price
b. Price 1 month after offering
c. Current market price
d. Number of shares outstanding at the time of the IPO
e. Number of shares outstanding 1 month after offering
f. Current number of shares
Explain why the IPO was successful or not
Question 3: Provide an example of when a merger or an acquisition, rather than an IPO, is a more appropriate way to grow.