Research your organization and find capital projects your company has completed in the last 5 to 10 years. Explain the project assessment methods the organization should have used to assess these projects (IRR, NPV, payback, and ARR). What are the advantages and drawbacks to using each one?
Sample solution
Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell.
In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.
God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.
Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.
To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.
References
Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.
Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.
Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.
Sample Answer
Sample Answer
Project Assessment Methods in Capital Projects: A Comprehensive Overview
Capital projects are essential for organizations aiming to grow, improve efficiency, or leverage new technologies. In the last 5 to 10 years, many companies have undertaken significant capital projects to enhance their infrastructure or expand their operations. To ensure these projects are viable and align with the company’s financial goals, organizations typically use various project assessment methods, including Internal Rate of Return (IRR), Net Present Value (NPV), Payback Period, and Average Rate of Return (ARR). This essay explores these methods, discussing their advantages and drawbacks.
1. Internal Rate of Return (IRR)
Description
The IRR is the discount rate at which the present value of future cash flows from a project equals the initial investment. It represents the expected annualized rate of return on an investment.
Advantages
– Time Value of Money: IRR accounts for the time value of money, providing a realistic measure of profitability over time.
– Comparison Tool: It allows for easy comparison between projects with different scales and timelines, making it simpler for decision-makers to evaluate investment opportunities.
Drawbacks
– Multiple IRRs: Projects with alternating cash flows can lead to multiple IRRs, complicating decision-making.
– Assumption of Reinvestment: IRR assumes that interim cash flows are reinvested at the same rate as the IRR, which may not be realistic.
2. Net Present Value (NPV)
Description
NPV calculates the present value of cash inflows and outflows associated with a project, using a discount rate to account for the time value of money. A positive NPV indicates that the project is expected to generate more wealth than it costs.
Advantages
– Direct Profit Measure: NPV provides a clear indication of the expected increase in value from the project.
– Flexibility in Discount Rate: Organizations can adjust the discount rate based on their required rate of return or cost of capital.
Drawbacks
– Complexity: Calculating NPV can be complex and require accurate forecasts of future cash flows.
– Sensitivity to Assumptions: Small changes in assumptions about cash flows or the discount rate can significantly affect NPV results.
3. Payback Period
Description
The Payback Period measures the time required to recover the initial investment from a project’s cash inflows. It focuses on how quickly an investment can be recouped.
Advantages
– Simplicity: The payback period is straightforward to calculate and understand, making it accessible for stakeholders without advanced financial knowledge.
– Risk Assessment: A shorter payback period may indicate lower risk, as funds are recovered sooner.
Drawbacks
– Ignores Time Value of Money: The payback period does not consider the time value of money, potentially leading to suboptimal decisions.
– Cash Flows After Payback: It ignores cash flows that occur after the payback period, which may be critical for long-term projects.
4. Average Rate of Return (ARR)
Description
ARR calculates the average annual profit expected from an investment as a percentage of the initial investment. It is often used for quick assessments of profitability.
Advantages
– Ease of Calculation: ARR is simple to compute and understand, providing a quick reference for profitability.
– Focus on Profitability: It emphasizes the project’s ability to generate profit relative to its cost.
Drawbacks
– Ignores Time Value of Money: Like the payback period, ARR does not consider the time value of money, which can lead to inaccurate assessments.
– Short-Term Focus: ARR may favor short-term gains over long-term benefits, potentially leading to poor investment decisions in projects with extended payback periods.
Conclusion
In summary, capital projects are vital for an organization’s growth and sustainability. The appropriate assessment methods—IRR, NPV, Payback Period, and ARR—each offer distinct advantages and drawbacks. While IRR and NPV provide valuable insights regarding profitability and long-term value creation, they require more complex calculations and assumptions. On the other hand, Payback Period and ARR offer simplicity but may overlook crucial factors like the time value of money. Ultimately, organizations should consider using a combination of these methods to ensure a comprehensive evaluation of their capital projects, aligning financial viability with strategic objectives.
