Capital Budgeting Techniques

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Title: Capital Budgeting Techniques
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Subject: Business
Date: December 24, 2003
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As values on the profitability index increase, so does the financial attractiveness of the proposed project. An advantage of this technique is that it attempts to adjust for capital rationing. A major disadvantage is if projects are mutually exclusive, and we cannot accept fractions of projects, this can lead to a scaling problem with this method...
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A major disadvantage is if projects are mutually exclusive, and we cannot accept fractions of projects, this can lead to a scaling problem with this method. An example of this method is in table 2. C0 PV(C1,..,Cn) PI NPV Project A 200 240 1.2 40 Project B 1000 1100 1...
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