FreshTucker Limited allows divisional managers to make capital investment decisions up to $10 million. However, divisional managers are required to send to head office detailsof each decision taken, including their justifications. The manager of the hospitality and conference facilities division, Ceila Wang, has been trying to improve this process within her division. At present, department managers within the division are required to provide a detailed NPV analysis of their investment proposals. Because of the nature of her division, Ceila wonders whether the right long-term projects are treated fairly within this decision model. She feels that some of the investment opportunities proposed by department managers are more strategic and a lot of potential projects do not seem to be meeting the positive NPV requirement.

Required

(a) Identify reasons why the projects are not meeting a positive NPV requirement.

(b) What type of qualitative factors would be relevant to the projects?