Question
Suppose you paid your old college finance professor to evaluate a project for you. If you would pay him regardless of your decision concerning whether
Suppose you paid your old college finance professor to evaluate a project for you. If you would pay him regardless of your decision concerning whether to proceed with the project, should his fee for evaluating the project be included in the project's incremental cash flows? Under what circumstances could payback and discounted payback be equal? And what are the drawbacks of these two methods? How are normal and non-normal cashflows different? Which capital budgeting method has the least drawbacks making it superior to other capital budgeting methods?
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