Discuss the principal objections to the use of the cash payback method for evaluating capital investment proposals.
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- Discuss the principal limitations of the cash payback method for evaluating capital investment proposals.What are the principal objections to the use of the average rate of return method in evaluating capital investment proposals?What are the major disadvantages of the use of the internal rate of return method of analyzing capital investment proposals?
- Is it ever appropriate or acceptable to use the payback method of evaluating capital investment decisions?Discuss the advantages and disadvantages of using the Internal Rate of Return method for analyzing capital investment projects.Outline the limitations of the capital asset pricing model as a method for obtaining discount rates for the purposes of capital budgeting.
- Discuss how a project's risk can be incorporated into capital budgeting analysis. Should discounted cash flows be used to evaluate capital budgeting projects?Discuss the advantages and disadvantages of using the Net Present Value method for analyzing capital investment projects.When and under what conditions the cross over rate will be used will be an essential consideration in capital planning. Is it possible that it may cause an issue in the project selection process? Explain.
- Why should the financial manager include opportunity cost but ignore sunk costs when evaluating a proposed capital investments? Give an example of each.What are some risk factors when making decisions regarding capital projects? Provide details.Who is responsible for the financial evaluation of investment proposals?
