Its been two months since you took a position as an assistantfinancial analyst a

Its been two months since you took a position as an assistantfinancial analyst at Caledonia Products. Although your boss hasbeen pleased with your work he is still a bit hesitant aboutunleashing you without supervision. Your next assignment involvesboth the calculation of the cash flows associated with a newinvestment under consideration and the evaluation of severalmutually exclusive projects. Given your lack of tenure atCaledonia you have been asked not only to provide a recommendationbut also to respond to a number of questions aimed at judging yourunderstanding of the capital-budgeting process. The memorandum youreceived outlining your assignment follows: