Now put yourself in Houston’s position, and develop a capital budgeting analysis for the valve
system. As you go through the analysis, keep in mind that the purpose of the analysis is to help
Chicago Valve’s sales representatives sell equipment to other nonfinancial people, so the analysis
must be as clear as possible, yet technically correct. In other words, the analysis must not only be
right, it must also be understandable to decision makers, and the presenter—Harrison, in this case—
must be able to answer any and all questions, ranging from the performance characteristics of the
equipment to the assumptions underlying the capital budgeting decision criteria.