Hi Anonymous,

If you come up with those calculations and have two differents NPVs, the idea is to ask the client (or the interviewer) his goals right from the beginning of the case or along the case

• If no specific goals mentioned, you can assume that the client wants to go for the highest NPV. So go with NPV2. This is the most common choice.
• If the client has cash restrictions then you might want to go with NPV1
• If your client has more qualitative goals, you might want to make your choice according to this. For instance, if your client does not have the capabilities to to Investment 1, then recommand to go with 2.

Again, the most important is to be clear with client's goals/KPIs as soon as possible in your case.

Hope this helps

Hello!

This is an excellent question to showcase how important it is to know WHAT IS SUCCESS for the client.

If you could only ask one question at the beggining of the case -actually, don´t worry, you can ask many-, it would need to be this one, and can be phrased in different ways:

• What is success for the client?
• What is the client´s target with this comparison?
• Are there any metrics or KPIs that the client is particularly concerned about?

Like this, you would know precisely which is the key thing for the client and, once you have compared both -as I see you did already, and I agree with the reasoning-, you can choose.

Hope it helps!

Cheers,

Clara