Question: 2. (a) Explain how inflation affects capital budgeting analysis; (b) What is the difference between scenario analysis and sensitivity analysis? How might you use each

2. (a) Explain how inflation affects capital budgeting analysis; (b) What is the difference between scenario analysis and sensitivity analysis? How might you use each during the capital budgeting process? (c) What is sensitivity analysis and what role does it play in the capital budgeting process? (d) Discuss the techniques of various investment appraisal methods in capital budgeting.

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