What relevant cash flows must be forecast to make capital budgeting decisions? Why is it important to focus on cash flows as opposed to net income for capital budgeting purposes?
How is riskiness of a capital budgeting project evaluated and how are the results incorporated into the capital budget decisions? How would you measure the risk of a project and incorporate it into your decision if you were a finance officer?
Distinguish among beta (or market) risk, within-firm (or corporate) risk, and stand-alone risk for a project being considered for inclusion in a capital budget.