Discussion Question - CLO 1, 2, 4, 5

For this discussion question, pair up with a classmate from a different country, if possible. Meet on Zoom (and record the meeting) to discuss the points below:

What is the payback period on each of the above projects?

Given that you wish to use the payback rule with a cutoff period of two years, which projects would you accept? Why?

If you use a cutoff period of three years, which projects would you accept? Why?

If the opportunity cost of capital is 10%, which projects have positive NPVs? How do you know?

If a firm uses a single cutoff period for all projects, it is likely to accept too many short-lived projects. Is this statement true or false? How do you know?

If the firm uses the discounted-payback rule, will it accept any negative NPV projects? Will it turn down any positive NPV projects? How do you know?

Instructions:

One partner must create a Google document and share it with the other discussion question partner. List both partner names in the Google document.

After you meet, you will both write your conclusions to these questions in the shared Google document.

When both partners have added their conclusions to the document. One partner per group will need to post the link to the Google document in the Discussion Board. Only one post per group is needed. Be sure to include the recording to your meeting within the document!