Which are The very different patterns of cash flows on the securities which just described raise significant problems when investors are comparing yields?
Which are The very different patterns of cash flows on the securities which just described raise significant problems when investors are comparing yields?
Capital budgeting is vital in marketing decisions. Decisions on investment, which take time to mature, have to be based on the returns which that investment will make. Unless the project is for social reasons only, if the investment is unprofitable in the long run, it is unwise to invest in it now.
Often, it would be good to know what the present value of the future investment is, or how long it will take to mature (give returns). It could be much more profitable putting the planned investment money in the bank and earning interest, or investing in an alternative project.
Step by step
Solved in 2 steps
