Corporate Finance Spring 2025 - Session 14: Choosing between investments and Side Costs/Benefits

In this session, we started by comparing NPV versus IRR as decision rules, and why they might yield different answers for mutually exclusive projects, of both same and different lives. Our conclusion was that there is absolute best rule to follow for all companies, since it will depend on your position in the life cycle and access to capital. We then moved on to look at the side costs and benefits embedded in most investment decisions, and why these have to be brought into the analysis, looking at opportunity cot and product cannibalization as examples of side costs and synergies as side benefits. Slides: https://nyu.box.com/s/ken8hh7tdfelljvuea0k45wqyjz9ck73 Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14test.pdf Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session14soln.pdf