Category: 5. Capital Budgeting

Uncertainty is defined as a situation where there is a possibility of differing outcomes. For example, in an uncertain situation, the managers should evaluate the chance of difference in expected cash flows. They have to estimate whether the NV would be negative or the IRR would be less than the cost of capital. Statistical Techniques…

Capital Budgeting is the process by which the firm decides which long-term investments to make. Capital Budgeting projects, i.e., potential long-term investments, are expected to generate cash flows over several years. Capital Budgeting also explains the decisions in which all the incomes and expenditures are covered. These decisions involve all inflows and outflows of funds…