Describe two basic concepts of capital budgeting from the following list:
• Independent vs. Mutually Exclusive Projects
• Throughput Analysis
• Net Present Value
• Capital Rationing
• Sunk Costs
• Opportunity Costs
• Discounted Cash Flow
• Internal Rate of Return
Then, answer the following question and comment:
- Why is each concept important for businesses to consider in the capital budgeting process?
- Give a detailed example for each concept.
Sample Solution