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    Capital budgeting: should daily cash inflows be estimated for NPV calculations?

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    Most firms generate cash inflows every day, not just once at the end of the year. In capital budgeting, should we recognize this fact by estimating daily project cash flows and then using them in the analysis? If we do not, are our results biased, and if so, would NPV be biased up or down? Explain.

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    If we recognize the fact that firms generate cash inflows everyday in capital budget analysis, the analysis ...

    Solution Summary

    The solution examines capital budgeting NPV calculations.