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CAPITAL INVESTMENT DECISION
What is a capital investment decision?
A capital investment decision involves committing funds to long-term assets that are expected to generate returns over several years, fundamentally shaping the firm's productive capacity and future profitability.
What is the difference between independent and mutually exclusive projects?
Independent projects can be accepted together; mutually exclusive cannot.
What is the Net Present Value (NPV) method in capital budgeting?
NPV is the difference between the present value of future cash inflows and the initial investment outlay, discounted at the cost of capital; a positive NPV indicates value creation for shareholders.
What is a contingent project in capital budgeting?
A project whose acceptance depends on accepting another project.
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