The size, timing and risk of cash ﬂows are important when evaluating a capital budgeting decision.

Question

Quizplus · Accepted Answer

The size, timing and risk of cash ﬂows are essential considerations when evaluating the feasibility of a capital budgeting decision. The size of cash flows relates to the magnitude of the cash flows associated with the project, which is crucial in determining whether the investment is financially viable or not. The timing of cash flows is crucial because investors prefer to recover their investment in the shortest possible time. Finally, the risk associated with the cash flows is a vital factor as it determines the probability of achieving the expected returns from the investment.

The Size, Timing and Risk of Cash ﬂOws Are Important