Question:
This is an introduction to Capital Budgeting. It introduces five types of capital budgeting techniques used to evaluate proposed investments. You'll find definitions for Net Present Value(NPV), Internal Rate of Return(IRR), Profitability Index(PI), Payback Period, and Accounting Rate of Return(ARR). This solution will also define classifications that firms use to classify their projects. These include cost reduction decisions, plant expansion decisions, equipment replacements decisions, expansion into new products or markets, and safety and/or environmental projects. This solutions will provide you with practical tools for analysis and classifications of capital budgets.