Question: 1. Assess the relevant cash flows used in forming a capital budgeting decision model. For this assignment, focus upon an expansionary problem.
2. Evaluate the cost of capital (wacc) for use in a capital budgeting decision model. Make sure to define each component of the formula. Explain how the resulting cost of capital (wacc) is used within a capital budgeting model. How can the Capital Asset Pricing Model contribute to this analysis? Explain.
3. Weigh each of the following decision metrics that can be used within a capital budgeting decision model: net present value, internal rate of return, and payback period. Explain how each metric is formed and discuss the critical value of each in forming conclusions within a capital budgeting decision model. Discuss which method has the strongest basis for being used and under which conditions each might be the preferred method.