Consider the following projects for a large auto manufacturer that is considering entering the minivan market. Eliminate complementary projects by combining projects and identify mutually exclusive projects. Are there any independent projects in this list? Explain.

 

a. a minivan assembly plant in the United States

b. ships to transport minivans into the United States

c. a minivan assembly plant in Korea

d. a plant to produce minivan parts in Taiwan. Alternatively, parts may be purchased from independent suppliers.

e. a plant to produce minivan parts in Malaysia

f. a distribution network for minivans in the United States—rail cars, ware houses, etc.

5. Explain the three main issues with using internal rate of return (IRR) for project evaluation.