Discuss various criteria for calculating and analyzing the desirability of a capital budgeting project. This task is extremely important as these projects often entail very large cash outflows and may significantly determine the future profitability of the firm. Assume the role of chief financial executive of a firm that is analyzing a major project that entails a large initial cash outflow at time point zero and has future expected cash inflows occurring over the next 10-year period. f you could select only three techniques to analyze this project's desirability, which three techniques would you select? Why? When analyzing a project's desirability, which factor do you believe is more important: the technique to analyze investment acceptability, or the use of the most accurate projections of cash flows? Why?

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Capital budgeting techniques discounting and non discounting in discounting there are three parts net present value method benefit cost ratio and internal rate of return and non discounting there are ... View the full answer