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balandron [24]
2 years ago
6

Capital budgeting is a tool that explicitly incorporates the time value of money in decisions involving significant long-term in

vestments.
True / False.
Business
1 answer:
Elena L [17]2 years ago
4 0

Answer: True

Explanation: Capital budgeting is a tool used for evaluating the profitability of long term investments by the company. In the process of capital budgeting, the incremental expected cash inflows are compared with the initial cash outflow of the project using time value of money analysis.

In time value of money analysis the expected cash inflows are discounted back to the present time by using a particular rate, and then that present value is deducted from outflow to ascertain the profit.

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Explanation:

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Thus, a negative value of NPV of children clothing is      obtained which is not an acceptable value option.

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