Problem
• Describe how net present value is used in the financial decision-making process.
• Explain the disadvantages of using the payback method.
• Compare and contrast the internal rate of return (IRR) method from the net present value method (NPV)
• Explain the effects of sunk costs and opportunity costs in deciding whether to accept a project.
• Review the financial considerations a company should make before investing in a project.
• Understand how net working capital, depreciation and interest influence the decision to buy or not to buy.
• Explain how inflation and interest rates affect the capital budgeting process.
• Review the types of assumptions used in sensitivity and scenario analysis.
• Describe how the options to expand or abandon a project are integrated in the capital budgeting process.
• Explain how decision trees are used to value investment alternatives.
The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.