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Capital Budgeting

Capital Budgeting

Capital budget

a) discuss potential flows with the regular payback method. Discuss whether or not the discounted payback method corrects all of these flaws.

b) explain why the NPV of a relatively long-term project (one for which a high percentage of its cash flows occurs in the distant future) is more sensitive to changes in the WACC than that of a short-term project.

c) explain why IRR might be overly optimistic metric (give example of a project that might drive IRR artificially too high). What is the way to correct for inflationary IRR?

 

Answer preview to Capital Budgeting

Capital Budgeting

APA

569 words

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