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Global Business Management: Capital Investments and Budgeting

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1.What are some large capital investments that have a high degree of uncertainty and flexibility that would make managers think in terms of real options rather than NPV?
2.What are the expectations for a manager or an employee involved with the capital budgeting of a project?

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The solution determines real options rather than NPV based on large capital investments and expectations for a manager or an employee involved with the capital budgeting of a project.

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1. Large capital projects where the degree of uncertainty is high, traditional NPV analysis would fail to give desired results due to the underlying assumption in NPV that assumes a fixed scenario in which a company starts and completes a project, which then generates cash flow during some ...

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