What is the most prominent issue faced by an financial manager in any capital budgeting decision?
Homework Answers
Capital budgeting is the bulk investment decision; such as investment in purchasing plant, in new project, and acquisition of a factory.
These investments may prove wrong, if risks in the investments are not analysed properly. Therefore, risk factor analysing is very prominent.
Risk factor analysing: this is an issue analysing all those risks associated in capital budgeting; suppose exchange rate factor may not be so crucial now while investing in foreign project, because both the countries have stable governments and they are cooperative to each other; but, this situation may not remain in the long-run and there may be disturbance in future exchange rates; this can’t be predicted today correctly. Therefore, the issue of risk factors may ruin a capital budgeting decision.
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What is the most prominent issue faced by an financial manager in
any capital budgeting decision?
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