Question

Capital budgeting is: the process of finding the cost to start a new project. the process of deciding which project to do to increase the firm’s value. the process of budgeting companies monthly revenue and cost. the process of estimating how long the life of a new project. None of the above.

Answer 1

Answer:

the process of deciding which project to do to increase the firm’s value.

Explanation:

Some of the Capital budgeting methods include:

1. internal rate of return- internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

2. Cash pay back period- it is the period it takes to recover the amount invested in a project from its cummulative cash flows.

3. Net present value: net present value is the present value of after tax cash flows from an investment less the amount invested.

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