113.What is capital budgeting? Why are capital budgeting decisions often difficult and risky? 114.Briefly describe the time value of money. Why is the time value of money important in capital...

113.What is capital budgeting? Why are capital budgeting decisions often difficult and risky?

114.Briefly describe the time value of money. Why is the time value of money important in capital budgeting?

115.In using a capital budgeting method that takes the time value of money into consideration, management must consider a hurdle rate in making its decisions. What is a hurdle rate? What factors does management have to consider in selecting a hurdle rate?

116.How does the calculation of break-even time (BET) differ from the calculation of payback period (PBP)?

117.Briefly describe both the payback period method and the net present value method of comparing investment alternatives.

118.When making capital budgeting decisions, companies usually prefer shorter payback periods. Explain why shorter payback periods are desirable.