How is Capital Budgeting Done at Jacobs Compute the NPV of the labor-intensive alternative and the capital-intensive alternative 2. How is capital budgeting done at Jacobs? Where do the projects come from?
3. What are the discount rates used by Jacobs for 1) cost reduction, 2) new products, and 3) Reynolds. Is the use of multiple discount? 4. Evaluate the NPV versus Competitive Advantages of the proposed project. Should be project be selected? What if demand was raised above plant capacity?
Jacobs Division has no products with more than $5 million in sales revenue.
Meeting this type of demand is not a primary concern of the company.
Could use the capital-intensive approach later if necessary.
Evaluation of Mr. Reynolds
His research and due-diligence essentially make all of his projects risk-free.
MacFadden may get frustrated that he rejects so many potentially strong investments.
