Based on the reviews of the Capital Budgets, respond to the
following discussion questions.
You are encouraged to research outside sources and, of course,
cite them. Do not, however, quote sources word-for-word, but
rather, respond to the Discussion Forum Question in your own
words.
1. Identify four reasons that capital budgeting decisions by
managers are risky.
2. Why is an investment more attractive to management if it
has a shorter payback period?
3. Why should managers set the required rate of return higher
than the rate at which money can be borrowed when making a typical
capital budgeting decision?
4. Why does the use of the accelerated depreciation method
(instead of straight line) for income tax reporting increase an
investment’s value?
After you’ve completed the questions above, please provide a
brief explanation of how this information is important in
managerial decision making.