When considering a capital budgeting project the ﬁnancial manager should consider:
A) Only the size of the project.
B) Only the timing of the project cash ﬂows.
C) Only the risk of the project cash ﬂows.
D) Only the size and timing of the project cash ﬂows.
E) The size, timing, and risk of the project cash ﬂows.

Question

Quizplus · Accepted Answer

When considering a capital budgeting project, it is important for the financial manager to take into account the size, timing, and risk of the project cash flows. The size of the cash flows determines the potential profitability of the project, while the timing of the cash flows determines how quickly the investment will be recouped. Additionally, the risk of the cash flows will affect the overall risk profile of the project and the company as a whole. Therefore, all three factors should be considered in making a capital budgeting decision.

When Considering a Capital Budgeting Project the ﬁNancial Manager Should