Let’s Discuss: The Making of Capital Investment Decisions
You should be able to explain and support your reactions to the following questions:
- What is the difference between NPV,IRR, Payback analysis and how are these methods related?
- What are examples of opportunity costs and incremental cash flows?
- How does the cash flow of a project impact whether or not a company pursues a certain project?
- Give an example of how you would employ the different capital budgeting techniques to a real life situation or a situation you can envision. How would you differentiate among three different projects if you could only pursue one of those projects?