The accuracy of capital budget decisions is critically dependent on:

Question

Quizplus · Accepted Answer

The accuracy of capital budget decisions is dependent on many factors, but the most critical one is the project life span estimates. Accurate estimates of the project's duration, cash inflows, and outflows are essential to determine the project's net present value (NPV), internal rate of return (IRR), and payback period. These financial analysis tools rely heavily on the accuracy of the anticipated future cash flows, which all begin with realistic projections of the project's life span. Currency exchange rates, employee morale, and supplier availability may all impact a capital budget decision, but they are not as critical as accurate project life span estimates.

The Accuracy of Capital Budget Decisions Is Critically Dependent On