If management is not committed to funding a project or does not believe that the project is a strategic fit for the$$ organization, the potential for not approving the project is$$ high, even if the project has a high net present value. Do you$$ agree? Discuss.

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Part $1$

A$.$

No$.$ When evaluating a capital$$ project, employees commitment plays a key role in the economic feasibility of that project. Although a project might be financially$$ attractive, employees might not be efficient on the development of the project.$$ Therefore, the company may have to determine which project to invest$$ in$,$ and look at employee constraints and understanding of what particular project makes sense with the$$ company's overall strategy and goals. Employees may select a project that is feasible for$$ them, but management still can choose against funding a project if it is outside the scope of the$$ company's main objectives.$$ Therefore, all capital budgeting decisions are approved by key employees but can be vetoed by upper management.

B$.$

Yes. When evaluating a capital$$ project, the commitment employees make upfront on the project will determine how economically feasible the project is$.$ Although a project might be financially$$ attractive, without that$$ commitment, the risk of the project being a good investment will decrease considerably. Management would have to step in and ensure the longevity of the project by training employees and work on employee retention. Any capital budgeting decision will not be feasible without$$ management's long$-$term commitment to$$ fund, implement and operate the project with the employees.

C$.$

Yes. When evaluating a capital$$ project, management commitment plays a key role in the economic feasibility of that project. Although a project might be financially$$ attractive, management might choose to not fund it for a variety of reasons. The company may have several competing projects to invest$$ in$,$ yet not have enough resources to fund them$$ all, so tough choices have to be made.$$ Or$,$ the project might be a good$$ investment, but the company chooses to not fund it because that particular project does not fit with the$$ company's overall strategy and goals. Management might also choose against funding a project if it does not fit with the$$ company's social or political objectives. Any capital budgeting decision will not be feasible without$$ management's long$-$term commitment to$$ fund, implement, and operate the project.

D$.$

Yes. When evaluating a capital$$ project, management decision making plays the main role in the development of that project. They determine how financially sound the project$$ is$,$ as well as how feasible it is for the project to be implemented into the current business structure of the business.$$ Ultimately, if the project is a good$$ investment, management will move forward with the project in the hopes that a$$ short$-$term investment will provide positive numbers to solidify a$$ longer$-$term contract to$$ fund, implement, and operate the project.