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Capital Budgeting Process

1. What are the elements of the capital budgeting process? How would you conduct a capital budgeting analysis for a global project? How would you conduct the capital budgeting process, such as the calculation of NPV and IRR, from the perspective of the host country?

2. How would you conduct the capital budgeting process from the perspective of the home country?

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1. What are the elements of the capital budgeting process? How would you conduct a capital budgeting analysis for a global project? How would you conduct the capital budgeting process, such as the calculation of NPV and IRR, from the perspective of the host country?

The process of capital budgeting helps ensure the optimal allocation of resources and it assists management towards the goal of wealth maximization. The three major elements existing within a capital budget process are planning, cost analysis, and financing. All of these elements require a certain amount of research capability, external or internal staffing, organizational capacity, and expertise. An effective capital budgeting process requires a comprehensive effort in planning the following: an inventory of existing capital assets; a review of capital assets needing replacement; and a review of constituent demands for services and goods in the future. In analyzing costs, the key is to match available revenue sources with a set of wide-range expenditure options and to match these options to revenue availability. ...

Solution Summary

The solution discusses the elements of the capital budgeting process; how to conduct a capital budgeting analysis for a global project; how NPV and IRR are calculated from the perspective of the host country and how the capital budgeting process is conducted from the perspective of the home country. 561 words with references included.

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