Identify how prescriptive and descriptive analytics can be used in the capital budgeting process.

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Part $1$

A$.$

Predictive and prescriptive analytics are valuable in developing projections used in future cash flow decisions. Analytics incorporating multiple data sources improve the projection$$ accuracy, resulting in$$ higher$-$quality capital investment decisions$($i$.$e$.,$ selecting a capital investment alternative that gives managers more$$ flexibility$).$ The projections can be about nondiscounted cash flow$$ model, net present$$ value, and accounting rate of return.

B$.$

Predictive and prescriptive analytics are valuable in developing projections used in$$ cost$-$volume$-$profit analysis decisions. Analytics incorporating multiple data sources improve the projection$$ accuracy, resulting in$$ higher$-$quality capital investment decisions$($i$.$e$.,$ selecting a capital investment alternative that results in decrease in variable$$ costs$).$ The projections can be about historical cash$$ flows, accounting rate of$$ return, and product demand.

C$.$

Predictive and prescriptive analytics are valuable in developing projections used in cash flow models. Analytics incorporating multiple data sources improve the projection$$ accuracy, resulting in$$ lower$-$quantity capital investment decisions$($i$.$e$.,$ selecting a capital investment alternative that results in future cash$$ flows$).$ The projections can be about positive$$ returns, or nondiscounted cash flow model.

D$.$

Predictive and prescriptive analytics are valuable in developing projections used in capital investment decisions. Analytics incorporating multiple data sources improve the projection$$ accuracy, resulting in$$ higher$-$quality capital investment decisions$($i$.$e$.,$ selecting a capital investment alternative that results in a positive$$ return$).$ The projections can be about future cash$$ flows, future resource$$ usage, or customer demand.