Analyzing the News The author contends that efficiency gains may shave costs but that shareholders rarely reap the benefits of cost-saving since the savings is that innovation is really the ultimate driver that can generate huge gains in shareholder wealth and that managers should have the courage gains will be realized. Thinking Critically Questions 1. The process of evaluating and selecting projects for a company to invest in is called: O A. capital budgeting. OB. budget preparing. OC. project generating. OD. capital structure. 2. The most critical step in project analysis is: OA. investing the money. OB. establishing a discount rate. C. estimating cash flows. OD. calculating the NPV. F 3. Investing in research and development or innovation is harder to evaluate than cost-cutting projects because: OA. cash flows are easier to estimate. OB. cash flows are harder to estimate. O C. management does not understand innovation. OD. there is no difference in evaluation difficulty