1. 1: Capital Budgeting Decision Criteria: Introduction Capital Budgeting Decision Criteria: Introduction Firms use capital budgeting for their long-term asset investment decisions. Capital budgeting is important because fixed asset investment decisions chart a company's course for the future. Capital budgeting is similar in principle to -Select- in which future cash flows are estimated, risks are appraised and reflected in a cost of capital discount rate, and all cash flows are evaluated on a (-Select- value basis. The primary methods used in this process are: Net present value, Internal rate of return, Modified internal rate of return, and Payback. Projects that firms consider are either independent or mutually exclusive. In addition, projects may have normal cash flows or nonnormal cash flows. Whether a project is independent or mutually exclusive will impact the firm's capital budgeting analysis as we will see when we discuss the different decision rules. - - - - - - - - - - - - - - - - - - - - - BACK 10 Assignment -Select- Attempts: Score: 12 1. 1: Capital Budgeting Decision Criteria: Introduction interest analysis risk analysis Capital Budgeting Decision Criteria: Introduction security valuation Firms use capital budge or their long-term asset invesLITICIIL UCLISTUITS. Capili duycuiry lpur lant vecause fixed asset investmenl uECISIONS Cila uycury 13 Important vecause fixed asset investment decisions chart a company's course for the future. Capital budgeting is similar in principle to (-Select- in which future cash flows are estimated, risks are appraised and reflected in a cost of capital discount rate, and all cash flows are evaluated on a (-Select- value basis. The primary methods used in this process are: Net pre value, Internal rate of return, Modified internal rate of return, and Payback. Projects that firms consider are either independent or mutually exclusive. In additi projects may have normal cash flows or nonnormal cash flows. Whether a project is independent or mutually exclusive will impact the firm's capital budgeting analysis as we will see when we discuss the different decision rules.