1. Define the net investment for a capital budgeting project. What is included in a capital budgeting projects net investment?

2. Capital budgeting projects can be classified according to the purpose of the project. List and explain the three categories for classifying projects according to their purpose.

3. The impact of indirect effects of a capital budgeting project should be included in cash flow estimation. Give some examples of indirect effects, and explain why they are important and should be considered in the capital budgeting decision process.