Some of the steps in the process for addressing capital budgeting decisions are listed below. Which lettered choice puts the steps in the proper order?
1 Identify relevant cash flows.
2 Perform sensitivity analysis.
3 Apply quantitative techniques.
A) 1, 3, 2
B) 1, 2, 3
C) 2, 3, 1
D) 3, 1, 2

Question

Some of the steps in the process for addressing capital budgeting decisions are listed below. Which lettered choice puts the steps in the proper order? 
1 Identify relevant cash flows.
2 Perform sensitivity analysis.
3 Apply quantitative techniques.
A) 1, 3, 2
B) 1, 2, 3
C) 2, 3, 1
D) 3, 1, 2

Quizplus · Accepted Answer

The correct sequence for addressing capital budgeting decisions starts with identifying relevant cash flows (1), then applying quantitative techniques to analyze those cash flows (3), and finally performing sensitivity analysis to assess the impact of changes in key assumptions (2).

Some of the Steps in the Process for Addressing Capital