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Discuss some considerations that should be taken into account when doing capital budgeting. Then, explain how...

Discuss some considerations that should be taken into account when doing capital budgeting. Then, explain how interest expenses and taxes affect capital budgeting.

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Answer #1

Factors that should be taken in capital budgeting are

Cash flows

Years

Interest rate

Tax rate

Salvage value

No. Of years

Inititial investment

And then present value

Interest rate determines the annual discount rate on your investment on which cash flows should be discounted and tax rate gives you tax shield on the inveatment

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