Capital Budgeting: Riordan Research Inc.
Columbia Business School graduate Steve Falconer recently left a large pharmaceutical company to join the finance department of up-and-coming biotechnology firm Riordan Research. With a $50 million capital budget, the company has asked Falconer to decide which among 10 projects it should fund. Among the issues facing Riordan are competing research efforts, a manufacturing plant at capacity, and the opportunity for expanding in tax-advantaged Ireland. If chosen, a project must be fully funded. In this case students examine Riordan's competing priorities and each project's capital requirement to create an integer model that will aid in determining which set of projects should get the go-ahead.
Case id: 090208