Publications
Publications
- February 1991 (Revised November 1993)
- HBS Case Collection
Investment Analysis and Lockheed Tri Star
Abstract
A set of five exercises in capital budgeting. Student calculates and compares various decision criteria (including IRR and NPV) for capital investment projects. This is an introductory case, where relevant cash flows are provided, and the focus is on the discounting mechanics and the decision to invest. In addition, one exercise directly probes the link between positive NPV projects, and value added to the shareholders. The final "exercise" is a three page mini-case analyzing Lockheed's decision to invest in the TriStar L-1011 Airbus project. This drives home the importance of discounting and NPV, and shows the adverse effect of a negative NPV project on shareholder value.
Keywords
Citation
Edleson, Michael E. "Investment Analysis and Lockheed Tri Star." Harvard Business School Supplement 291-031, February 1991. (Revised November 1993.)