10
The Fundamentals of Capital Budgeting
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Learning Objectives
Discuss why capital budgeting decisions are the most important investment decisions made by a firm's management.
Explain the benefits of using the net present value (NPV) method to analyze capital expenditure decisions and calculate the NPV for a capital project.
Describe the strengths and weaknesses of the payback period as a capital expenditure decision-making tool and compute the payback period for a capital project.
Explain why the accounting rate of return (ARR) is not recommended for use as a capital expenditure decision-making tool.
Compute the internal rate of return (IRR) for a capital project and discuss the conditions under which the IRR technique and the NPV technique produce different results.
Explain the benefits of postaudit and ongoing reviews of capital projects.
In October 2010, Intel ...
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