In a few sentences, answer the following question as completely as you can. What is the stand-alone principle? Why is it important to the analysis of capital projects?

Define “the stand-alone principle” applying in evaluating projects and discuss the types of cashflows in project evolution.

We learn there are three primary methods used to analyze capital investment proposals.   Please compare and contrast these three methods.   Be sure to include strengths (benefits) and weaknesses (drawbacks) of each.   Three primary methods are: Payback method Internal rate of return Net present value.

What type of projects does the Payback method favor?

Financially, what is the economic worth of outbidding thecompetitors for a project?

Explain with example traditional capital structure theory. How is it different from the capital structure theory of Modigliani & Miller. Which of the two theories would you prefer – give reasons.

When can a project may fail the net-investment test?

Would changes in the cost of capital ever cause a change in the IRR ranking of projects? Why or why not?

What are the major methods used to prioritize capital projects?

What are some risk factors when making decisions regarding capital projects? Provide details.