Question 1: Why is the payback period not a preferred method in the capital budgeting decision-making process? Which decision-making criteria is the best to use for capital budgeting decisions? Why?
Question 2: What is a sensitivity analysis? How is it determined? How can risk be addressed in the capital budgeting process?
Question 3: What is an example of a capital budgeting project in an organization with which you are familiar? What are some examples of relevant and irrelevant costs associated with this project?