Externalities present in projects being considered in capital budgeting are very difficult to quantify and as a result of this, they should be excluded from the financial analyses.

Question

Quizplus · Accepted Answer

Externalities, although difficult to quantify, should not be excluded from financial analyses in capital budgeting. They can have significant impacts on the overall benefits and costs associated with a project, and therefore should be considered in the decision-making process.

Externalities Present in Projects Being Considered in Capital Budgeting Are