Capital budgeting is not only important to people in finance or accounting, it is essential to people throughout the business organization. For example, a marketing or production manager who is proposing a new product must be familiar with the capital budgeting procedures of the firm. If he or she is not familiar with the concepts presented in this chapter, the best idea in the world may not be approved because it has not been properly evaluated and presented. You must not only be familiar with your product, but also with its financial viability.
For this Discussion please assume that you’re a high-level executive that must make a decision as to whether or not you should invest in a project that will yield positive cash flows. Assume that the investment to be made is $$500,000.