Describe capital budgeting risk

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Case: Calculate the Internal Rate of Return (IRR), Net Present Value (NPV) and Profitability Index (PI) of earning an MBA at a university assuming the initial cost of one-year MBA program is $20,000 (upfront) that earns you a promotion that increases your annual salary (take-home pay) by $10,000 annually for 5 years. Your cost of capital is 15%.

What are the pros and cons of the following capital budgeting techniques: Net Present Value (NPV), Modified Internal Rate of Return (MIRR) and Profitability Index (PI)?

Describe capital budgeting risk and two of the methods used in capital budgeting to identify the uncertainties associated with any given capital project.

Reference no: EM133290936

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