Homework answers / question archive / Which two of the following five statements are correct? Select two alternatives: When evaluating a capital budgeting decision, we generally include interest expense

Which two of the following five statements are correct? Select two alternatives: When evaluating a capital budgeting decision, we generally include interest expense

Finance

Share With

Which two of the following five statements are correct?

Select two alternatives:

• When evaluating a capital budgeting decision, we generally include interest expense.
• Many investments will also require an increase of net working capital, which will reduce the available free cash flow from the project.
• In Scenario Analysis, one parameter is changed after the other to investigate the effect on the NPV, whereas in Sensitivity Analysis all parameters are changed simultaneously.
• The most difficult part of capital budgeting is deciding how to estimate the cash flows and the cost of capital.
• The value of currently unused warehouse space that will be used as part of a new capital budgeting project is a sunk cost.