FORUM DESCRIPTION When we use the term capital budget," we are referring to the list of projects that business might undertake during the next planning period. When analyzing whether a company should undertake a certain project, one of the most critical steps in analyzing a capital investment proposal is estimating the incremental cash flows for the project. This is important because there is financial risk involved when undertaking any new business venture A variety of factors must be considered such as opportunity costs and sunk costs. Inflation must also be considered The process of analyzing capital budget decisions requires a manager to consider many factors, as well as possibly even conducting a sensitivity analysis or a scenario analysis. By inputting different variables, the manager will be able to see the different outcomes which might occur In the health care industry, these factors may include risk, profitability, the needs of both the medical staff and the patient population and how the project serves the community In your post, respond to the following questions . Explain the term "financial risk" . Discuss why risk analysis is important to the capital investment decision making process