Reference no: EM133320206

The IT department of your company has begun to appreciate that its projects do not exist in a business vacuum. Your company must also commit resources to operations, shareholder returns, and non-IT projects for short- and long-term durations. It is, therefore, necessary to assess project risks from a financial standpoint before committing to a project.

Discuss capital budgeting and time value of money (TVM).

Explain why the time value of money is essential to capital budgeting.

Analyze potential financial investment risks, and explore the relevance of the capital asset pricing model (CAPM) in determining portfolio risks.

Imagine that you have two projects competing for your team's time, and you need to select the project that will offer the greatest financial return to the organization. Describe the process you would follow to quantify each project's economic value and the factors you would consider when selecting the best project for your team.