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    Discounted-Cash Flow Models for Decision-Making

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    Some capital-budgeting choices require managers to decide between upgrading high-technology research equipment and not upgrading. How would financial mangers at a Pharmaceutical, a drug manufacturer, use discounted-cash-flow models in their decision-making process? Be sure to address impact not replacing the equipment has on future operating cash flows used in the model.

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    The financial managers at Pharmaceutical might use discounted-cash-flow models such as the net present value (NPV) model to make capital-budgeting decisions. Considering the time value of money in any decision where the project's impact extends beyond a year is important to the ...