xplain why it is important to understand that capital budgeting is subject to the validity of the forecasted data.  Additionally, explain whether this reduces the reliability of these types of tools.  Are there any other alternatives, or are these tools some of the most reliable that currently exist?

Explain Broader Diversification Reduces Risk?

h. What does the term “risk” mean in the context of capital budgeting; to what extent can risk be quantified; and, when risk is quantified, is the quantification based primarily on a statistical analysis of historical data or on subjective, judgmental estimates? i. 1. What are the three types of risk that are relevant in capital budgeting? 2. How is each of these risk types measured, and how do they relate to one another? 3. How is each type of risk used in the capital budgeting process? j. 1. What is sensitivity analysis? 2. Perform a sensitivity analysis on the cost per unit, unit sales, and salvage value. Assume each of these variables can vary from its base-case, or expected, value by plus or minus 10%, 20%, and 30%. Include a sensitivity graph, and discuss the results. 3. What is the primary weakness of sensitivity analysis? What is its primary usefulness?

What is capital budgeting? Explain various steps in its preparation and throw light on its limitations.

Discuss and explain in details the five most typical and common mistakes when making assumptions for and preparing cashflow projection for investment project proposal?

What are the weaknesses of the payback method?  What other options do you have?

NPV and IRR are two of the most important decision criteria in capital budgeting.  Will NPV and IRR methods always yield the same accept/reject decision? Please elaborate and list one potential cause of ranking conflicts between NPV and IRR.

What are the best functions to use when evaluating projects with uneven cashflows?

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

State whether the following statement true or false and provide a brief explanation