The flow-to-equity (FTE)approach in capital budgeting is defined as the:

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The flow-to-equity (FTE) approach in capital budgeting involves discounting a project's levered cash flows to the equityholders (i.e. the shareholders) at the required return on equity. This approach is used when analyzing projects that will be financed with debt, and takes into account the risk and return expectations of equity investors. Option A is incorrect because it involves discounting all project cash flows at the overall cost of capital, rather than just the equity cash flows. Option B is incorrect because it is not a commonly used or recognized term in capital budgeting. Option D is incorrect because it refers to the dividends and capital gains that will be available to shareholders after a project has been completed, rather than the process for evaluating the project's cash flows before it has started. Option E is incorrect because it refers to the discounting of a project's unlevered cash flows to equity investors, rather than its levered cash flows.

The Flow-To-Equity (FTE)approach in Capital Budgeting Is Defined as The