Question:As we talk about the capital budgeting process, ask yourself what is capital budgeting and in what manner can this be used within an organization? What are examples of capital budgeting projects and the cash flows, including incremental cash flows, associated with these examples?

Important concepts about capital budgeting are:

1. Capital budgeting investment decisions are long-term decisions.

1. Capital budgeting investment decisions rely on cash flow instead of earnings.

1. Three main methods of ranking investments are the net present value (NPV), the internal rate of return (IRR), and payback (TVM not used).

*****Tell us about any experience you may have had regarding capital budgeting. Was it a positive or negative experience and why? Also, what tools (Payback, NPV, IRR, etc) did you use and why. If you have no experience in this area, which tool would you prefer use and why?