n Investment Analysts Journal - Investment Basics XLVIII. Common challenges in capital budgeting
|Article Title||Investment Basics XLVIII. Common challenges in capital budgeting|
|© Publisher:||Taylor & Francis|
|Journal||Investment Analysts Journal|
|Author||C. Firer and E. Gilbert|
|Publication Date||Jan 2004|
|Pages||41 - 45|
ISI Social Science
Extracted from text ... Investment Basics XLVIII. Common challenges in capital budgeting 41 Investment Basics XLVIII. Common challenges in capital budgeting We explore four areas of common difficulty in applying the discounted cash flow rules to the valuation of a project: the relevant cash flows, problems with the IRR decision rule, dealing with inflation and choosing a discount rate. * 1. RELEVANT CASH FLOWS Accepting a new project has the effect of changing the future cash flows of the firm. To evaluate the project, we must consider whether these changes in cash flows add value to the firm. The first step is ..
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