The basic principal of capital budgeting is that ________ with a positive adjusted net present value should be accepted by the firm.

Question

Quizplus · Accepted Answer

Capital budgeting involves evaluating potential projects and investments based on their expected cash flows and the time value of money. The adjusted net present value (NPV) takes into account the initial investment, future cash flows, and the cost of capital, and represents the expected increase in shareholder wealth from undertaking the project. Projects with a positive adjusted NPV are expected to generate more cash than they cost, and therefore create value for the company. Accounts receivable are not typically evaluated in capital budgeting, as they represent short-term cash inflows from sales rather than long-term investment decisions.

The Basic Principal of Capital Budgeting Is That ________ with a Positive