1. Identify four reasons that capital budgeting decisions by managers are risky.
2. Why is an investment more attractive to management if it has a shorter payback period?
3. Why should managers set the required rate of return higher than the rate at which money can be borrowed when making a typical capital budgeting decision?
4. Why does the use of the accelerated depreciation method (instead of straight line) for income tax reporting increase an investment's value?
5. After you've completed the questions above, please provide a brief explanation of how this information is important in managerial decision making.