Question 1: What are the important administrative considerations in the capital budgeting process?
Question 2: Why does capital budgeting rely on analysis of cash flows rather than on net income?
Question 3: What are the weaknesses of the payback method?
Question 4: What is normally used as the discount rate in the net present value method?
Question 5: What does the term mutually exclusive investments mean?
Question 6: How does the modified internal rate of return include concepts from both the traditional internal rate of return and the net present value methods?
Question 7: If a corporation has projects that will earn more than the cost of capital, should it ration capital?
Question 8: What is the net present value profile? What three points should be determined to graph the profile?