Question-1 What are the various tools for analyzing capital investments? What are the decision criteria, advantages and disadvantages of each? Which one would you recommend that your boss use in analyzing a new business opportunity? Why?
Question-2 When a new business venture is adopted, an investment in working capital will be needed. Why is this the case? Your text notes that this investment in working capital is not depreciable and will be recaptured when the project ends. Is this a realistic assumption? What conditions might result in a case when this does not occur?