In making a capital budgeting decision,one needs to compare cash flows in terms of

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When making a capital budgeting decision, it is important to consider both the amount and timing of cash flows. This is because the net present value (NPV) of a project depends on the timing and size of the expected cash flows. Two investments may have the same amount of cash flows, but if one investment generates more cash flows in the earlier years, it will have a higher NPV. Therefore, to make an informed decision about which investment to pursue, one needs to compare cash flows in terms of both their amounts and when they occur.

In Making a Capital Budgeting Decision,one Needs to Compare Cash