Company is introducing a new project in a field related to, but separate from its present business Management is that for the new enterpnse be supplied by a local bank that it has approached for a loan finance department has done a capital budgeting analysis the venture projecting reasonable cash and calculating an NPV and an IRR that both look very favorable

The bank's loan officerhoweverisn't satisfied with the analysis. She insists on seeing a financial projection that made which calculates interest on cumulative cash flowsincorporates that interest as a cost of the projectand shows the buildup and decline of the debt necessary to accomplish the proposalShe essentially wants a business plan complete with projected tinancial statements.

Reconcile the bank position with capital budgeting theory.