In descending order of importance, this case is designed to meet the following teaching objectives:
1) Explore the problem of resource allocation within corporations. By looking at many projects and with insights into the contrasting senior management perspectives, this case is a useful complement to other capital-budgeting cases that focus on single projects. 2) Illustrate and assess the impact of capital rationing on capital investment decisions. The results usually reveal selection of economically suboptimal capital budgets. How this selection arises is an important learning point. 3) Exercise and interpret the implications of classic tools of investment analysis (e.g., net present value, internal rate of return, payback), and consider possible adjustments for differences among the projects in risk (e.g., through the use of risk-adjusted discount rates), size (e.g., through the profitability index), and life (e.g., through using equivalent annuities, replacement chains, or both). 4) Consider the impact of behavioral influences on financial decision-making. The roles in this case are overlaid with numerous possible conflicts among the decision-makers: cross-cultural, cross-functional, and political. The case illustrates the potential effects of those conflicts and provides some insights into remedies.