b describe the basic principles of capital budgeting, including cash flow estimation;

Question 1

Basic Principles of Capital Budgeting

Answer 1

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Question 2

Basic Principles of Cash Flow Estimation

Answer 2

^^Financing costs are not included in a cash flow calculation but are considered in the calculation of the discount rate

Question 3

^^When computing the CF’s for a capital project, which of the following is -least likely- to be included? (Tax effects, Financing Costs, Opportunity Costs)

Answer 3

Least Likely to be computed in for a CF of a capital project are FINANCING COSTS. ^^Financing costs are not included in a cash flow calculation but are considered in the calculation of the discount rate