Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Textbook Question
Chapter 10, Problem 1RQ
Why is capital budgeting such an important process? Why are capital-budgeting errors so costly?
Expert Solution & Answer
Summary Introduction
To discuss: The reason why capital budgeting process is importance and the reason why these process errors are costly.
Explanation of Solution
Capital budgeting decision is considered as an important tool as it involves the investments which needs large cash outlays at the start of the project’s life and it penetrate the firm to specific course of action under a comparatively long time horizon.
Since, they are difficult and costly to reverse, as due to the large cost and they include fixed assets which are not been liquidated or discharged easily.
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