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Chapter 8

1. From the Chapter 7 discussion question you have settled upon one of the two proposed projects. Now you need to understand the requirements associated with capital budgeting for this project as you move forward. Based upon your study of material in Chapter 8, what are the major steps involved in the capital budgeting process?

2. In your study of the capital budgeting process it is obvious that you need to understand the concept of free cash flow related to the project selected. Discuss the adjustments that will need to be made to the estimated free cash flow in your evaluation of the selected project. Include in your discussion comments as to the roll that salvage value of equipment would play in your estimate of free cash flow.