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Question: Bill Watts, president of Western Publications,


Bill Watts, president of Western Publications, accepts a capital-budgeting project advocated by Division X. This is the division in which the president spent his first 10 years with the company. On the same day, the president rejects a capital-budgeting project proposal from Division Y. The manager of Division Y is incensed. She believes that the Division Y project has an internal rate of return at least 10 percentage points above that of the Division X project. She comments, “What is the point of all our detailed DCF analysis? If Watts is panting over a project, he can arrange to have the proponents of that project massage the numbers so that it looks like a winner.” What advice would you give the manager of Division Y?


2.99

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