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Capital Budgeting
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NATURE OF CAPITAL INVESTMENTS LARGE $ AMOUNTS INVESTED PERMANENT SET STRATEGIC DIRECTION LONG PLANNING HORIZONS ACCURATE FORECASTS REQUIRED VISIBLE MONUMENTS
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ADMINISTRATIVE STEPS IDENTIFY PROJECTS COLLECT DATA ANALYZE PROFIT AND RISK GAIN REGULATORY APPROVALS ARRANGE FINANCING IMPLEMENT CONTROL
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CAPITAL BUDGETING TO OPTIMIZE PROFIT – AN EXAMPLE Project % R-of-R % C-of-C Mil. Of $'s Non-Discretionary--1080 A2010150 B181075 C1610200 D141260 E91210 F61240 G4125
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CAPITAL BUDGETING TO OPTIMIZE PROFIT PERCENT PERCENT NON DISCRETIONARY A B C D E F G OPTIMUM CAPITAL BUDGET $565 MIL. MARGINAL COST OF CAPITAL INVESTMENT OPPORTUNITY SCHEDULE $
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