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Analyze the pros and cons of identifying the potential intangible benefits of investment proposals. What is...

Analyze the pros and cons of identifying the potential intangible benefits of investment proposals. What is the outcome if management fails to consider the intangible benefits in a capital budgeting decision?

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Potential intangible benefits should be identified as apart from the number crunching, it can add to the overall perspective of whether to go through with an investment or not. Such intangible benefits such as improving safety standards/product quality/processes etc. may not be captured in numerical terms but are still significant benefits. On the other hand, there is no certainty that intangible benefits would materialise and if an investment were to be undertaken based majorly on them, it could turn out to be a loss.

If management fails to consider intangible benefits in a capital budgeting decisions that it may happen that projects which should have been accepted, are rejected.

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