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Discussion Post 1. Why is the capital budgeting decision such an important process? 2. Why capital...

Discussion Post

1. Why is the capital budgeting decision such an important process?

2. Why capital budgeting is more important than capital structure and working capital management?

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Answer #1

1) Capital budgeting is important for the following reasons:

a) capital budgeting involves capital expenditures and hence involve huge outlays of cash.

b) capital budgeting decisions have long term consequences .

c) It may be difficult and or expensive to reverse the capital budgeting decisions.

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