Chapter 10 Capital Budgeting.pdf - 1 Chapter 10 Capital...

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1 Chapter 10 Capital Budgeting CHAPTER OUTLINE Learning Objectives Capital Budgeting Factors Affecting Capital Budgeting Changes in Government Regulations Research and Development Changes in Business Strategy Formulating a Proposal Costs in Capital Budgeting Benefits in Capital Budgeting Evaluating the Data (Techniques of Capital Budgeting) Payback Net Present Value or NPV Profitability Index or PI Internal Rate of Return, or IRR Accounting Rate of Return, or ARR Lowest Total Cost Making the Decision Following Up Taking Corrective Action Conclusion Review and Discussion Questions Exercises and Problems Case Study: SWAN Rehabilitation Company: A Great Success Story REVIEW AND DISCUSSION QUESTIONS 1. What distinguishes a capital investment from other investments?
2. List and briefly explain the five-step capital budgeting process.
2 3. What are the various costs that must be evaluated in a capital budgeting decision?
4. What are some of the tax-factor benefits of capital budgeting?

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