How do large corporations go about selecting positive NPV projects?

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How do large corporations go about selecting positive NPV projects?




Answer: For most large corporations there are two stages in the investment process: the preparation of the CAPITAL BUDGET, which is a list of planning investments, and the authorization process for individual projects. This process is usually a cooperative effort.
Investment projects should never be selected through a purely mechanical process. Managers need to ask why a project should have a positive NPV. A positive NPV is plausible only if the company has some competitive advantage that prevents its rivals from stealing most of the gains.

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