Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 6QTD
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Question
How does the Analysis Period Differ from Project Lives?
Expert Solution
Step 1
In capital budgeting, the decisions are made to select the best alternative among various available alternatives using capital budgeting techniques such as net present value method, payback period method, etc.
Step 2
Project life is the life over which project generates cash inflows. Analysis period is the period which an evaluator considers while evaluating various mutually exclusive projects.
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