Problem:
American Steel Corporation is considering two investments. One is the purchase of a new continous caster costing 4100 million. The expected net present value of this project is $20 million. The other alternative is the purchase of a supermarket chain, also costing $100 million. It, too, has an expected net present value of $20 million. The firm's management is interested in reducing the variability of its earnings.
Required:
Question 1: Which project should the company invest in?
Question 2: What assumptions did you make to arrive at this decision?
Note: Please show guided help with steps and answer.