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, 2, 3
B) 2, 3, 1
C) 3, 1, 2
D) 1, 3, 2

Question

Quizplus · Accepted Answer

The proper order for addressing capital budgeting decisions is to first identify relevant cash flows, then apply quantitative techniques, and finally perform sensitivity analysis to test the robustness of the results. Therefore, the correct order of steps is 1, 3, 2, making option D the correct answer.

Some of the Steps in the Process for Addressing Capital